Title of recording: Oral History Interview with James E. Holshouser Jr.,
March 13, 1998. Interview C-0328-2. Southern Oral History Program
Collection (#4007)

Title of series: Series C. Notable North Carolinians. Southern Oral
History Program Collection (C-0328-2)

Author: Jack Fleer

Title of transcript: Oral History Interview with James E. Holshouser
Jr., March 13, 1998. Interview C-0328-2. Southern Oral History Program
Collection (#4007)

Title of series: Series C. Notable North Carolinians. Southern Oral
History Program Collection (C-0328-2)

Author: James E. Holshouser Jr.

Description: 332 Mb

Description: 74 p.

Note:
Interview conducted on March 13, 1998, by Jack Fleer;
recorded in Chapel Hill, North Carolina.

Note:
Transcribed by Unknown.

Note:
Forms part of: Southern Oral History Program Collection
(#4007): Series C. Notable North Carolinians, Manuscripts Department,
University of North Carolina at Chapel Hill.

Note:
Original transcript on deposit at the Southern
Historical Collection, The Wilson Library, University of North Carolina
at Chapel Hill.

Editorial practicesAn audio file with the interview complements this electronic edition.The text has been entered using double-keying and verified against the original.The text has been encoded using the recommendations for Level 4 of the TEI in
Libraries Guidelines.Original grammar and spelling have been preserved. All quotation marks, em dashes and ampersand have been transcribed as entity
references.All double right and left quotation marks are encoded as "All em dashes are encoded as —

[TAPE 1, SIDE A]

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[START OF TAPE 1, SIDE A]

JACK FLEER:

[text missing]

Governor Holshouser, why did you want to be governor?

JAMES E. HOLSHOUSER JR.:

Well it wasn't something that had been planned since
childhood. As a matter of fact in my first session of the legislature, a
lawyer by the name of Andy Jones drafted all of my bills that I put in
and we got to be good friends and we talked a lot. He said one time, he
said, "I don't know why anybody wants to be governor
you lose about a friend a day because every time you make an appointment
there were five other of your best friends that thought they were going
to get it or whatever. And no matter who you pleased every time you make
a decision you are displeasing somebody." As I kept going
through the legislative process I kept getting sort of a hidden sense of
frustration over not being able to get some things done that in some
cases I thought were pretty common sense and in other cases I thought
could never be done until you had sort of a major change, not like a
paradigm change, but a dramatic change in how the person at the top and
those around him viewed government. That the Democrat establishment had
been in so long, there were so many people within the bureaucracy even
at the near top levels who were just part of that establishment that you
couldn't break the mold of how problems needed to be
addressed. I don't think that was all to the Democrats as
oppose to say the Republicans in Iowa or Ohio or some place where if any
party that is in too long

Page 2

has the potential. And I
got more and more frustrated with some of the approaches to spending and
policy and just finally decided that I ought to try to do something
about it. It is a very hard decision to make because I tend to always
want, grew up playing cards close to the vest in terms of making
decisions, of analyzing every which way I could, rather than just trying
to make a snap judgment and it was very hard. The bumper strips that
came out in October '71 just said Holshouser because I had
some folks still trying to talk me into running for U.S. Senate or the
possibility to running for Congress if Jim Broyhill ended up running for
the Senate. So those bumper strips just came out with no office on them
at all. Folks that were trying to help me knew we were going to run for
something but they didn't know what. But I think that was the
cautious side of me. The part where my heart was said that as opposed to
Jim Holshouser political career which I never intended to have one that
where I thought I could make a difference was in the
governor's office. So even though we had never won in this
century I was enough of an analytical about it to know that the election
returns were getting closer all the time and you didn't know
when that breakthrough was going to be. But it could happen just as easy
in '72 as anytime.

JACK FLEER:

You said that you felt and experienced some frustration. Was that
frustration primarily related to the decision making process or were
there frustrations about particular projects or policies that you felt
should be?

JAMES E. HOLSHOUSER JR.:

Some of them miniscule. Just for example, I thought it was ridiculous to
make new license plates every year and we got that changed. Now
everybody gets them every five years or whatever. You just put these
little paper sticky things on in the middle. The prison officials used
to come over and argue that they needed something to

Page 3

keep the prisoners busy and there is some logic in that. But overall in
terms of cost it didn't make sense. But you also had the fact
that I had an awful lot of friends that lived on dirt roads that were
either muddy or dusty all the time just because they were Republicans
and I just knew that was morally wrong. And I could also see that the
mountain counties were getting short changed on roads because of the
state approach that said we give everybody a pro rata share of dollars
based on pave roads. They cost so much more to build in the mountains
and so what you ought have done was allocate it on paved mileage. Pave
so many miles as a pro rata part. That kind of thing. I was also very
concerned that we had a brand new university system that had just been
created. It really needed somebody to stand behind it all the way. I had
been through all the wars in the '60s over higher education.
It was really frustrating that we keep playing these games with it.
Having grown up with Appalachian in our home town you
couldn't help but have that as one of the things that was at
the top of your list of things to be interested in. I guess I would have
been interested in that if I had been in Wilkes or Davidson county, I
just don't know but I just know I was. And I knew I would be
a good advocate in helping to make sure that people didn't
start trying to tear the system apart or do end runs right off the
bat.

JACK FLEER:

And that had been a very big issue in the most recent legislature or
so.

JAMES E. HOLSHOUSER JR.:

That is right.

JACK FLEER:

Any other sort of policy concerns that you had that you might of said,
"Well, I could do something about that if I was
governor?"

JAMES E. HOLSHOUSER JR.:

Well, I was convinced going back to roads that we needed a planning
process that said to the public in writing here is what we are going to
do in the next ten

Page 4

years, whatever. We have got to
plan for some many years. Still in politics it takes seven to ten years
to get a road built from the time you say it is needed just because of
all the environmental impact studies and acquisitions of right of ways
and all of that. But at the time I went in I think we had a highway
program that supposedly had something like nine times as many programs
as we could build in the next fifty years or something. Everybody was
being promised a road and you had just example after example. One of the
most notable which is Highway 64 east of Raleigh that went out to
Wendell and drove up to the top of the bridge and stopped. And so about
a 100 yards short of that bridge it cut off and went through Wendell
through the countryside. That thing had been sitting there over ten
years without anybody finishing it. Somebody had gotten it started
thinking somebody else would have the good sense to come along and
finish it. And you would find projects that had been started by one
administration just put on the shelf when the next administration came
in and just gathered dust. And we got in place a policy that I hoped
would stick. I have the feeling right now that that is not holding. I
think we are slipping back into some of the same problems that we had in
the '50s and '60s.

JACK FLEER:

Once you were elected and preparing to be governor, indeed when you were
taking the oath of office, what were your thoughts on that occasion?

JAMES E. HOLSHOUSER JR.:

Well it was an interesting time. We were so tired by election day. I
think I probably told you the last time that when we did that fly around
the day before election I saw myself on television that night, the first
time in a good while. I just looked like I was dead on my feet, which I
was. Election night is still just sort of a blur. Bob Scott called and
asked me to come by the mansion and just talk, which was really just a
courteous and good government thing to do. And so we had about two days
there in

Page 5

Raleigh afterwards. Then we took off to
Florida just to try to recover and stayed about ten days. And I told
some of the folks who were staying behind some of the things they had to
do while we were gone, just to leave us alone.

JACK FLEER:

You and your family going to Florida?

JAMES E. HOLSHOUSER JR.:

Yes. But I knew when we got back there were transition things you had to
do. You had to get ready to move the family to Raleigh. So we lined up
an apartment and that sort of thing. But all of this sort of
non-government, it was personal. From a governmental standpoint we were
far less prepared to start an administration then Skipper Bowles would
have been had he won because he had people working ever since the
primary on the assumption that he had won it all. So we had some very
fast cranking up to do, finding people to serve in the cabinet, key
positions and getting hold of the budget that Bob Scott was going to
present to the legislature and sort of look and see where the things
that we wanted to do were going to fit in. And it was, we had a
transition office set up over not too far from the capitol, set up
headquarters there and started looking to people to talk to about coming
into the administration and try to get as many of those as we could by
inauguration day. But the programmatic side was still, just required a
tremendous amount of very focused attention. We had some fairly decent
analyzers helping. But I knew from having been on the appropriations
committee and having been in legislature, I knew the things I wanted to
try to do and about how much money it would cost. Because I
wasn't like some businessman coming in who had gotten
elected, as has happened in a lot of states, and that helped a lot. But
it also meant that I was the one who had to do the analyzing. I knew it,
but I couldn't tell other people how to go about making sure
where it would fit. And I am still with Casey Stengel. I would rather be

Page 6

lucky than good and I think we were lucky again.
Because the Advisory Budget Commission and the governor proposed a big,
big, not permanent tax cut but sort of a temporary tax rebate. We
inherited about a six hundred million dollar surplus. A fair amount of
that was going to be nonrecurring which made it wise to propose rebates.
But once you decided we are not going to have that rebate then you had
all of a sudden a big pot of money, too big in a way, to work with in
your programmatic stuff. We put a heavy focus on education with
teacher's salaries and some other things involved in the
public schools. I think it was maybe about a year after I had been in
Raleigh that I went to the NCAE convention and got introduced as the
first guy since NCAE had been founded to keep every single campaign
promise made to them, something like that. Wasn't sure I was
the one to help them the most, but they didn't forget that I
had done what I said I would. But we had too much money. This again
fortunately you knew that you had to park that money some place where it
didn't get involved in the recurring expenses in order to
protect the budget for next year. And I get a lot of credit for things
that I am due, but in an accidental way. We put more money into state
park acquisitions that had been done in the whole history of the state
combined before that time. But it was non-recurring money. We opened up
the door that might not should have been opened in terms of state
appropriations for buildings for local community colleges because we
hadn't done any of that since they had started in the early
'60s except for initial $500,000 appropriation to
each school as it got started I think, but again non-recurring.
It's more and more recurring these days, but it
wasn't then. And so I have a lot of people with the state
park program and a lot of people in the community college program that
think that I really did well by them and we did but it was sort of
accidental.

Page 7

JACK FLEER:

As you were actually taking the oath of office and you were about to
assume the responsibilities of the position on inauguration day, do you
recall what was in your mind?

JAMES E. HOLSHOUSER JR.:

Well, we had the inauguration ball the night before and all the
Republicans who had come to town just raised hell. The first time a lot
of them had ever been to Raleigh for one of those. We got to bed very
late and started the day very early. We had an early communion service
at the First Presbyterian in Raleigh. Then we had to be over at the
mansion ahead of time where the inaugural party gathers and all that.
But we had worked almost up the last minute, being my typical
procrastinating self, on the inauguration address. I remember getting up
and thinking well at least it is not raining or snowing, typical
mountain boy I guess. I think because of the very solid courtesies that
Bob Scott had shown me since the election that we were being especially
cautious to make sure that the outgoing governor was treated with all
the honors that he was suppose to get. And when we got over to the
inauguration, you know it was sort of like coming to a homecoming in a
way when you sat, and you looked out over all these faces that had been
working for you over this last year or so and really in a sense longer
than that because I had known most of them for several years as state
chairman. It is one of those feelings almost like the proverbial wanting
to punch yourself to make sure it is real. It was hard to believe it was
happening.

JACK FLEER:

Well in two cases, I want you to comment on this. 1) It was the first
Republican governor of this century. A truly historic event. And 2)
being governor at any time, Republican or Democrat, it is a tremendous
responsibility.

JAMES E. HOLSHOUSER JR.:

Yes and we were scared about that. I told folks that we
shouldn't ever think that something had to be done just
because that is the way that it had always been

Page 8

done
because we were going to have to break some molds. But at the same time
our main job we had was to end up in four years with the people in North
Carolina being convinced they could turn the reins of state government
over to Republicans and not feel shaky about it. For a person who had
really grown up and gradually become more and more involved in trying to
build a two party system, that was just an extremely awesome
responsibility in a way. Because I knew we would make some mistakes and
we did just out of inexperience. Some of them just colossal. Fortunately
it wasn't the end of the world. We didn't do
anything that hurt the state very bad or anything. But I also remember
being, having such a good feeling that this had come about while my
parents were still alive because they, particularly my dad and a lot of
other Republicans of his generation, had lived their whole lives working
and trying but never really believing that they were going to see a
Republican governor. And it was good that he was there.

JACK FLEER:

What about the impact that assuming this job had on you personally? Was
that a thought that came to your mind or was that a distant concern?

JAMES E. HOLSHOUSER JR.:

Well I remember lying in bed in the Governor's Mansion the
first night over there. The way the windows are arranged in the
Governor's bedroom up on the second floor of the mansion and
shutters and shades and all, usually have some lights from the streets
coming in on the ceiling so it is not ever totally dark unless you
really work hard at it. And I am lying there looking up and I said,
"Well, you have certainly got yourself into now." And
there was a sense, there was a part of me that understood the budget
which I still think is the Governor's most important tool,
that felt pretty good. But there was so much more about the day to day
things that I was going to have to face that I knew that I
didn't know, that it was sort of scary just plain and simple.
I also had figured

Page 9

out that while a lot of the media
had bent over backwards, not trying to help us exactly, during the
campaign. We were the underdogs and you get a certain amount of
advantage from that and as soon as you won that whole attitude change.
Now you had to answer all of the questions. So I knew I was going to
have to face that too. And that got tougher as the administration went
along because of Watergate.

JACK FLEER:

It created an environment of people being suspicious of people in public
office. We will get back to that but did you feel that you had made
mistake.

JAMES E. HOLSHOUSER JR.:

No, never felt that and never did during the whole time and would have
gone back and done it again if you had asked me at the end of the term.
I was glad I didn't have the opportunity to run for
re-election because in my particular case because of the kidney problems
that would have been a serious mistake.

JACK FLEER:

Right, but never any second thoughts?

JAMES E. HOLSHOUSER JR.:

No, no. And by having the one-term limitation, it also left you with the
sure knowledge that if you could only run again, it would have been
unanimous.

JACK FLEER:

Well let's go back to some of these issues that you have
mentioned earlier that were sort of on your mind during the period of
transition and working up to the inauguration. If you would take one or
more of these, you mentioned the budget, education, parks, community
colleges and may be others, that you would rather look at. If you would
take a couple of these and comment on how these came to be important to
you, why was it that that particular issue, community colleges, parks,
education or whatever it is, that you want to talk about. Why did that
become important to you?

JAMES E. HOLSHOUSER JR.:

Well, it is bad to have to say so and I am not sure that I want to say so
for public attribution but it was a large part looking for places to put
money that would not be

Page 10

wasted but would not be
recurring, so that you didn't get yourself into trouble later
in your administration just approach the budget. If you had asked me in
October what I was going to spend money on, I would have talked about
education I know. Public schools a lot, talk about the university a lot,
might have mentioned the community colleges in passing, but not to the
extent that we ended up doing. Certainly not the parks. Because while I
knew that we were behind in park acquisitions I had always as a
legislator thought that because we had so much of the state that had
federal parks the fact that we had such a low amount of state park land
wasn't as bad an indictment as some people tried to make it.
And we probably made a mistake in not, I say made a mistake
I'll back up and say, the circumstances turned out to have
made the acquisition of all that extra park land subject to second
guessing because once you buy it you have got to have operating money to
operate. When we got the money appropriated to buy it, we knew it would
take time to get it so that you could operate it. So the money for
operations really wasn't much in that first biennial budget.
By the time 1975 came along and that would normally started to kick in,
we had gone into a recession and the energy crisis and all that and the
money wasn't there. It never got the kind of operating
support that it should have had and there was a lot of publicity about
it, probably during Hunt's second administration maybe. About
the fact that we had all this park land out there that was just letting
go to the dogs, that we weren't maintaining it right, or
operating it right. That was just sort of a left over from the
circumstances of '75, the energy crisis and all that. I
personally thought and I still think that the state had the highway
funds for road paving and had the general fund for everything else and
that the main purpose of that general fund ought to be education. It has
always been that way and the public schools needed more and we are still

Page 11

struggling with that. And time will tell
whether the current education initiatives are going to be proven to be
the answer. We have the tendency to try new initiatives but not to keep
it going long enough to see if it really works. A lot of people say we
just keep pouring money into it and nothing gets better and it is hard
to say that whether if you didn't spend the money things
would have gotten a lot worse. I think the main focus I had was because
of background was on the university and the education system. I thought
we had enough fat in the budget that we could cut some. I did what a lot
of governors around the country do, we got some people to come in and
they organized an efficiency study. We got Archie Davis to head up a
commission and his name alone was going to give that credibility. The
commission came in and businesses loaned people to come in and do the
study in the various departments. The records are pretty solid that we
saved about, ended up changes, that resulted in about 80 million
(dollars) a year which at that time was a lot and still a lot of money
but it was more money then than it is now.

JACK FLEER:

That was with recurring?

JAMES E. HOLSHOUSER JR.:

That is right. And a lot of them were just common sense things that came
from the departments themselves which is always the best way to go. You
ask people how they could do it better, how they could save money and
they always know better than anybody else if they will tell you. I was
real pleased with that because I thought part of what I had to do as a
Republican was to show people a few different wrinkles in the approach
to government. One way was to try as near as you could to show people
their tax money was being spent wisely and not just being wasted
unnecessarily. I don't think you ought to do one of those
every administration. I think you ought to do one of those every ten to
fifteen years because you'll cut back and it gradually starts
to build back up.

Page 12

JACK FLEER:

And history shows that it is done about each time a Republican government
comes into office.

JAMES E. HOLSHOUSER JR.:

Could be, could be.

JACK FLEER:

I mean there is one actually with a Democrat governor, but Jim Martin did
have his own.

JAMES E. HOLSHOUSER JR.:

That is one of the things I encouraged him to look at.

JACK FLEER:

One of the things that I take from what you were saying is that in a
sense, once you learned more about the budget, or maybe budget
developments became revealed after you were elected, you realize there
was a lot "surplus money" and so you were looking for
legitimate projects, nonrecurring. What does that say if anything about
how well people who run for public office are prepared to run the public
office?

JAMES E. HOLSHOUSER JR.:

Well, a lot of times they are not very well prepared. Now business people
if they are running a pretty good size business have had to deal with
budgets and how they operate their own business and there is some
carryover there, but not totally in that the state government has some
operations that are not ever going to be profit centers. We had a report
here at the Board of Governors yesterday and today about a North
Carolina hospital and the consultants were saying that there has been a
4.8% return on the state's dollars that have come in since
1990 or something like that. And I told them after the meeting, I said,
I don't think you are going to find the average legislator
that is going to relate to that because they are not use to thinking in
terms of monetary return on their dollars. They are used to providing
money for operating agencies that have a product they turn out that
doesn't make a return. So there is little bit different
mentality and you also have some different rules under which you operate
the state. You have got, you are

Page 13

required to go
out for bids on things and take the low bid unless there is some reason
to do otherwise and where business people really feel constrained on
things like that. Unless you understand how the state government works
in terms of having a surplus at the end of the year, some of which is
going to be from revenues exceeding what was estimated and that is
recurring money and that is available. Some of it is going to be unspent
money and that can't be spending in recurring because it
won't recur. So there are some practices that take people
awhile to figure out. You get a lot of help. I have to say that I
can't compare with anybody else but for me I got an extreme
amount of cooperation from people in the government. Now part of that
may be just been fear. I found early on I had to really be careful about
what I said to people lest a thought be taken as something that had to
be done right now. But the people in the budget office, people in the
Council of the State, went out of their way to accommodate. Part of that
was that I knew a lot of them already. And I knew at least a little bit
about what they did and what went on in those shops and I talked to the
budget people just countless hours as a legislator on the appropriation
committee because in those days the budget office was in the Department
of Administration. It was really considered apolitical and not the arm
of the governor necessarily but worked for the governor and the
legislature. Now you have legislative fiscal research over here and the
budget office is in the governor's office and they
don't always see eye to eye and I think that is more like
Congress, but I think it is not necessarily for the best. I
don't think we are going to change that. I think that genie
is out of the bottle. But it is not to say that any of the people that
work there are bad or anything. I think it serves the state better
probably to have one set of voices.

Page 14

JACK FLEER:

Now one of the practices that was in effect when you became governor was
that the outgoing governor, in your case Governor Scott, actually
prepared the budget.

JAMES E. HOLSHOUSER JR.:

That is right.

JACK FLEER:

What do you think of that idea? How did that effect your ability to be
governor?

JAMES E. HOLSHOUSER JR.:

Well it my case as I said, I sort of lucked out in a way because if they
had proposed a budget that took up all the money, I would have had to be
proposing cuts in that budget in order to do anything I wanted. I felt
strongly enough about that as a problem though generically that when Jim
Hunt was elected in 1976, I met with him a week after the election. I
said I want you to have some of your staff people to get with the state
budget people before anything goes to the Advisory Budget Commission. If
you have got some things that you want to put into the budget, we will
get them in there. Because it seems to me that when the people have
elected a new person, they are bound to have some programs. It just
makes sense that they ought to have the prerogative of doing it.

JACK FLEER:

You had not been brought into any anticipation and preparation of
Scott's budget?

JAMES E. HOLSHOUSER JR.:

That is right. And it is not to say that Bob Scott should have because it
was sort of a new situation there too. I think that if you look back at
the administration previously, he had not been particularly plugged in
with Dan Moore and Dan Moore and Terry Sanford hadn't been on
the same side. Terry Sanford hadn't been close to Luther
Hodges and if you just go on back and there has been sort of a history
of each person doing their own thing. But I can say this from what I
have heard from other states. We

Page 15

do extremely well
in transitions. I have just heard some real horror stories of outgoing
administrations not providing any assistance to the governor elect and
not letting anybody in the state government talk to the new people until
after they have gotten out of office. And of course, in elections when
an incumbent governor gets beat when he is running for re-election that
is much easier to understand from a human stand point. Somewhere along
the line you ought to let your sense of responsibility to the state say
that you have got to do it as a decent transition thing. I think we have
done generally good.

JACK FLEER:

Would you recommend any kind of change in that relationship, that may be
even put into law, or that the out going governor essentially recommends
the budget to the first general assembly of the incoming governor?

JAMES E. HOLSHOUSER JR.:

Well, I confess I haven't stayed up nights thinking about this
and my notion is that you don't get to be governor until you
are sworn in. At the same time somewhere or another that first budget
that goes to the legislature really ought to be the incoming
governor's. You can't give him power before he
takes office. It may well be that what we ought to do is to have that
first session of the legislature start about the first of March and let
that budget process and not have the budget go to them and come in
January the budget is already printed and it is in black and white
sitting in the state warehouses some place. So I think you
don't want to deprive the outgoing governor of the right to
stay governor as long as he is in office but at the same time I
don't think you necessarily have to give him the prerogative
of presenting that in that budget. So I think that might be the way to
do that just every fourth year have the legislature meet in March.

JACK FLEER:

Another issue that you mentioned that was very important to you, and I
wanted to explore a little bit, is the university governance procedure.
Under Governor Scott a

Page 16

major battle had occurred.
You were a member of the legislature at that time and you were very much
involved in those deliberations. What was it about that that you had to
do as Governor? Why was that a major concern of yours?

JAMES E. HOLSHOUSER JR.:

Well I think I talked with you before a little bit about the fact that I
thought we probably struck the best lick for the state in 1971 in
putting together the new structure of the university, the best thing
that happen while I was in the legislature. I still think my involvement
in that was more important than anything I did as governor and I think
it is one of the best things that has happen for the state in my life
time. Mostly because I think higher education in North Carolina is what
sets the state apart from a lot of sister states. I think we have just
been fortunate not to say we are perfect. We have a good education
system, public and private higher education, and probably have got a few
too many of each. I am not going to take on that battle. I have reached
the place where you have only got so many fights that you can fight and
that is not one I am going to fight. I had, for a guy who was thinking
about running for governor, I had put myself at risk a lot in
'71 simply by plowing a path of what I believe was where we
should end up and it came very close to perfect of where we did end up.
And if I had written it from the start it wouldn't have ended
up exactly where it did but very close. The things that were different
were not material long term differences. I felt that not only had we
done a good job for the future in terms of getting away from all of
these institutional battles, but that we had a way of maximizing the use
of the taxpayers' dollars by getting everything under one
umbrella, that said this institution is going to do this and this other
institution is going to be a different creature instead of trying to
have everybody be shooting to be king of the world. And I did a speech
to the combined Board of Governors and all the trustees up in

Page 17

Boone I think in the fall of '73. It
sort of recites how I feel about that. And while the governor
wasn't going to have a lot to do with what happened over
there when it cranked up and I wasn't going to be meddling in
Bill Friday's business. I told him that he could count on my
support all the way through. The most current immediate challenge to
that was the East Carolina Med School. I talked with him a lot about it
and I told him that sort of standing out here in the parking lot between
election day and inauguration day that in sometime along the way he
needed to calculate whether this was going to be a losing battle or not
and if it was it was probably one that shouldn't be fought
simply because the new institution was so young that you
didn't want it to be fatally injured right off the bat. It
turned out that we fought the fight and lost, but it still
didn't destroy the system. I fought as hard as I could. The
morning before the key vote in the House committee I had all the
Republicans to the mansion to breakfast. Got a commitment from all of
those Jack Stevens could deliver to the Democrat side that they would
stay to the person against it. The thing is that it turned out that
Stevens couldn't get enough Democrats and ours turned loose
and we probably lost a dozen or so, I can't remember exactly.
But I have always thought that was and in retrospect it probably turned
out for the best. Because even though it cost a lot of money and it
might have been spent in some better ways, at the moment the East
Carolina Medical School has turned out to be a real asset for the state.
If a man can't admit some mistakes, he isn't much
of a man. But we didn't know how well it was going to turn
out at the time. It is nationally recognized for the family medicine
program. Right now they have got a telemedicine program that is beaming
in doctors' office all over the east where people can call in
for consultations and specialization assistance. It is really working
well.

Page 18

JACK FLEER:

Did you feel at the end of your term, having in a sense lost that fight,
that you had won the larger fight maintaining…?

JAMES E. HOLSHOUSER JR.:

Yes, lost the battle but won the war. By the time I left office I think
it was in good standing and on solid ground. Still you are going to have
some fights. The fight that came along unexpectedly for me, and I
wasn't even aware of it when I was in office and signing
papers about it, was the stuff that was going on with HEW about the
segregation. Bill Friday would call and say they were having some more
negotiations with HEW and I had to sign off on a new plan if I would. I
would tell him to send it over but I didn't realize all the
implications of it at the time. It was only after I got on the Board of
Governors and on the committee here that was working on that that I
realized just how prolonged the process had been and how much of the
university's resources had been expended in that fight that
would have been so much better spent in other ways.

JACK FLEER:

And do you think that threatened the governance system or was that
undermining the quality of the program?

JAMES E. HOLSHOUSER JR.:

I don't think it threatened the governance system. I think it
threatened the ability of whatever governing body you have to act for
higher education. Because you just couldn't let the federal
government become the dictator for how you are going to run the
university. I think Bill Friday was exactly right in fighting it. For a
fellow who is by and large a liberal, he got a very bad name in some
circles. He is not a racist certainly but one who was standing in the
school house door and a lot of people thought for the wrong reason. I
thought for the right reason. I shouldn't stop there because
the things that the university implemented under his guidance in trying
to meet the same kind of goals and

Page 19

desirable
results that HEW wanted showed that he was going to do the right thing
but he wanted us doing it instead of them telling us and making us do
it.

JACK FLEER:

Which was an important difference?

JAMES E. HOLSHOUSER JR.:

Yes.

JACK FLEER:

Let's turn to discuss your relationship with the General
Assembly. You said in a speech in 1973 to the General Assembly,
"I have been here and because of that I believe in the General
Assembly". What did you have in mind with that statement?

JAMES E. HOLSHOUSER JR.:

Well, I had been in the General Assembly enough to know that there was
always a kind of tension between the legislature and the executive
branch. It didn't have anything to do with political parties.
A lot of people felt like the legislature didn't really have
the authority that it was suppose to have under the state constitution.
That you appropriate money and you left town and you never knew whether
the governor really spent it the way you said or not because there was
some flexibility in moving money around and still is. And there was
always the feeling that the governor was trying to run the show all by
himself and that we were just sort of temporary pawns in the game of
things. And I guess having coming in the legislature, out the
legislature, I thought that probably I could help bridge the gap a
little bit. I met the legislature at a preconvening thing they had I
think in December. I can't remember exactly where it was
except it wasn't in Raleigh. It was in Chapel Hill or Durham
some place I believe. I told them then as long as we didn't
worry about who got the credit that we would get along just fine. And I
found that through out the whole administration, that if I
didn't go out promoting everything that Jim Holshouser had
done, that that was pretty much true. So we set out a plan because we
didn't have near enough Republicans to be in control. As it

Page 20

turns out in the 1974 election, we lost down
to next to nothing. But I also knew that I had to be reasonably careful
not to have the legislature think that it could run the state government
from a distance some how. I had the advantage that I had worked with
them and they knew that they could believe me when I told them
something. That I wouldn't play games with them. I think that
was sort of the rock around which everything else had to be built. They
also knew that I had been over there long enough to know enough about
the government that I wasn't going to have to be watch dogged
all of the time. I was a little bit disappointed but not surprised that
some partisan stuff reared its head during that first session.
Didn't much after that. There was near to taking away the
authority of the governor to appoint the state board of elections and in
turn appoint county boards. Somebody, I have never known how, got me a
copy of some correspondences between some Democrat politicians and
legislators saying how some stuff ought to be done and we
aren't going to keep control over the election process.
Growing up in the mountains you are already paranoid about because there
are just too many stories of elections having been stolen. One of the
big, the biggest, applause-getter during the primaries in particular in
the spring when I was campaigning particularly west of Charlotte. They
would talk about isn't it going to be great to have a
Republican governor appointing the Board of Elections' people
to make sure the elections are honest. That just drove them wild.

JACK FLEER:

So you had raised people's awareness and desires, so to
speak.

JAMES E. HOLSHOUSER JR.:

Well, the awareness and desire was there but you let them know you
understood. But we were also fortunate that there was some people around
who understood that what the proposals were going to be far worse than
turning the reins over to the Republican Board of Elections'
people. And people like Ed Rankin who had been

Page 21

the
Administrative Assistant to Governor Hodges and head of the Citizens
Association came down to Raleigh to testify before a committee that it
was not a good idea. I went over and testified and told them that I
could understand their temptation but that wasn't in the best
interest of the state. And we beat that down with a couple of other
things on appointments. But that was sort of this little circus that was
going on to the side. It was just sort of a potential distraction but
the main game was still going on in terms of programmatic
activities.

JACK FLEER:

Did you think that circus as you called it was motivated by partisanship
or by institutional differences or something else?

JAMES E. HOLSHOUSER JR.:

Strictly partisanship. That wasn't legislature verses the
governor. And during the last two years of the term the hardest fights
were protecting the institution, the office of the governor from
invasion by the legislature. Jim Hunt as Lt. Governor and members of the
Council of the State helped head those off as a group. And not
necessarily totally altruistically. Jim Hunt was counting on being the
next governor and the Council of the State people didn't want
people meddling in their departments too much. So I lucked out
again.

JACK FLEER:

Did that occur in discussion with you or did those people act independent
of you in trying to put that down?

JAMES E. HOLSHOUSER JR.:

We didn't have any smoked filled rooms. I talked with several
Council of State people myself and said I am counting on you being
interested enough in your department to see that this doesn't
happen. Jim Hunt and I talked and said this is just not good for the
state, not good for the office of the governor. You may well be the next
governor you ought to make sure that this doesn't happen.

Page 22

JACK FLEER:

So there were some discussions between you. Lets go back to the more
positive part of this which is…

JAMES E. HOLSHOUSER JR.:

It was not an organized thing, at least that I knew about.

JACK FLEER:

You mentioned that as I quoted you that you believed in the General
Assembly. If you think about it in terms of the relationship between the
Governor and the legislature, as Governor did you think of the
legislature as being superior to you, equal to you, or inferior to
you.

JAMES E. HOLSHOUSER JR.:

A governmental and independent partner of sorts. They had a job to do in
their branch. I guess if you took political science in college you got
some understanding about that. Maybe not all the nuances. I understood
what I thought the role of the legislature should be. I had promoted as
a legislator having what I called the Auditor General which would be a
legislative officer whose job was to do post audit on governmental
appropriations just to see that the money did get spent the way that it
should. So I had that background. So I had an appreciation of the
differences in the branches at that standpoint but they had the
assignment under the constitution of appropriating the money and then we
ran operations. You are sort of a CEO in that regard. You
didn't treat the legislators as your Board of Directors, but
well Dick Spangler calls them your bankers.

JACK FLEER:

Your bankers?

JAMES E. HOLSHOUSER JR.:

That is close at times. And I always, with the legislators and
particularly with people on the Council of State, tried to remember that
they had all got elected too. The legislators hadn't gotten
elected statewide, but they had gotten elected. We had people who were
legislative liaison people who had been in the legislature and knew a
lot

Page 23

of them and who also knew how it worked. And I
think if you went back and talked to people who had been in the
legislature, who were in the legislature from 1973 to 1976, that you
will find that they felt that we had a pretty good relationship and more
of a cooperative relationship as opposed to executive confrontation with
the legislative side as you have seen so often in Washington in
particular.

JACK FLEER:

And do you think that result came from what your experience as a
legislator or your person, the way you approached your responsibilities
as Governor? How does that develop?

JAMES E. HOLSHOUSER JR.:

A little of all that. I am not a confrontational type person for the most
part. Every now and then you have to stand up and say folks that is just
not the right thing to do. Usually if you are smart, you will say that
might not be too bad of an idea but it might work better if you did it
this way. For instance on the coastal management bill, I get credit for
that and I am due some of it. But the fact is that it started in the
legislature in 1971. They set up a study commission. They had gone up
and down the eastern seaboard seeing what other states had done. They
came in with their legislation ready to go in 1973. Bill Wichard, who
had been an old friend, long standing from the legislature, was handling
it in the Senate. You could tell from the chemistry that you were going
to have to start off drawing a line in the sand here but knowing that
you were going to have to back away from that line. Backing away inches
at a time in order to get something through, before you end up at your
final line in the sand. You started off with everything being controlled
from Raleigh and gradually had to have a coastal resources commission
that was going to be composed mostly of residents of the coast appointed
by different people or at least represented different interests. Some
had to be local officials and some

Page 24

had this hat or
that hat and the size of the thing changed along the way. But because
you have been through the wars of knowing, watching the negotiating
process within the legislature happen over time, and knowing you had to
keep counting votes to see how many you'd get. You knew there
were some people you were never going to pull along. And you would just
have to out vote them in the end. So you kept counting the noses to see
when you reached a point where you had a majority. Then you drew the
line in the sand. And it turned out to be a pretty good thing for the
state overall. I haven't been totally happy with all the
results. At times environmentalists get out of control in terms of not
looking at cost versus benefit ratios I think. But sometimes that last
five percent costs five times as much as the other 95 percent. That is
when you need to be careful. Some people don't understand
that. But I think that is one of the better things that we did. I think
my major disappointment was not getting the mountain area management act
through, because we lost the Republican mountain component of the
coalition

JACK FLEER:

And why couldn't you bring them along?

JAMES E. HOLSHOUSER JR.:

Well they were prepared to go along with a Republican governor on this
stuff for down at the coast as it was three hundred miles away for some
of them. We didn't have any Republicans down there anyway
some of them figured. I was asking them to do it. But when we started
talking about the mountains, they started hearing from their populace,
constituencies. If you put it up on the legislative agenda, it will
still be that way for the mountains. We got a lot different mood in the
mountains as more people have moved in and different things have
happened. You know the ridge law came around because of that high tower
up in Avery County but there is still that strong populist feeling. We
didn't gain any of those Democrat legislators from the coast
who voted

Page 25

against the coastal bill. We lost these
over here. We just barely passed the coastal bill anyway. It just
didn't work.

JACK FLEER:

Did you feel that was something that you had put as much effort in to as
the coastal area management bill or was it a lower priority?

JAMES E. HOLSHOUSER JR.:

Well we had put more effort into the coastal area bill because it took so
much negotiating as you went along. All that negotiation was pretty much
out of the way and you had the package finished at the end that was
about as good as you could do. But that still wasn't enough
for the folks in the mountains.

JACK FLEER:

So you put more emphasis on it but people worked hard on the mountain
bill?

JAMES E. HOLSHOUSER JR.:

I worked with just as much intensity on the mountain act but it
didn't take as much time. Because they had already been
through the other one, they didn't have to do a whole lot of
thinking. Whatever you could use to persuade them the first time around,
you had already done that. They already knew where they stood and the
folks from the Piedmont mostly supported both bills. You had some people
on the coast that supported the coastal bill but not many.

JACK FLEER:

What do you think is the most effective means that a governor has to
secure the support of members of the legislature?

JAMES E. HOLSHOUSER JR.:

Well if you have really solid liaison people who are trusted and you are
trusted, that is important. You have got to have somebody who is sort of
a wheeler-dealer, who knows how to make a deal. I think lawyers are
usually pretty effective because they are use to negotiating things;
doesn't always have to be one but I think that is a good
start. They also understand sometimes the nuances of language that make
a difference. And if they have been there and know the people and are
liked that is

Page 26

important but invariably you end up
having to do some things yourself. Some times it is a matter of sitting
down with a group of a dozen people over at the breakfast at the mansion
and just talking about it. We did a fair amount of that. We had a
breadkfast with the Republican legislative leadership about once a week
at the mansion because I thought it was important that even though they
were a minority they felt like I was plugging them in on things. It was
important for me to know that they were in tune with what we were saying
and we weren't getting blind sided with some opposition that
I should have found out about and didn't. I also had
breakfast with the two appropriation committee chairmen pretty
frequently, the Democrats that I had know for a long time, and talked
about where things would go. And then occasionally you would have a
special issue that you would bring people in and talk about. And the
governor traditionally in January and February has all the legislators
over to breakfast. You can't do it all at one time
effectively so you have four or five group breakfasts that, not only are
traditional, but everybody enjoys them. You don't put any
hard sells on during that time.

JACK FLEER:

More of a social occasion in that instance. As far as the liaison people,
you worked in effectively about four legislatures or sessions, and you
said that it was important for that liaison person to have the trust and
confidence of the people. So does that make the decision of selecting
that person one of your most important decisions?

JAMES E. HOLSHOUSER JR.:

Absolutely, absolutely and if you don't, you pay a price for
that and if you don't really work hard; maybe more important
than any cabinet position or other office position in terms of finding
the right person. Because the two qualities I have mentioned, three
qualities, being likeable, knowing the legislature, and understanding
how to make deals, just are absolutely essential.

Page 27

JACK FLEER:

So how did you find that person.

JAMES E. HOLSHOUSER JR.:

Well as you would suspect it was a fairly limited pool because I felt
like it needed to be a Republican and at the same time we
hadn't had all that many Republican legislators over time. A
lot of them were extremely good legislators but they wouldn't
necessarily be good in this particular position. At the time I was
inclined to think, and my relationship with the legislature in recent
years as such that I can't say is still the case. At the time
I was inclined to think that people from the east were better deal
makers than people from the piedmont and mountains and were more use to
do it. We got George Clark from Wilmington and he went over to the
Utilities Commission after a couple of years. Then George Rountree from
Wilmington came up. Both of them had been in the legislature. Both were
very gregarious and both lawyers and both had been good legislators and
so they knew how it ran.

JACK FLEER:

So you felt pretty confident whenever you named those people that they
were going to be good representatives of you in the legislature?

JAMES E. HOLSHOUSER JR.:

Yes. And given what I said earlier about that being such an important
position, those may have been the two best appointments made the whole
time.

JACK FLEER:

That is a very interesting revelation. Can you elaborate on that a little
bit because some people think of the governor as an executive official.
That particular statement suggest that the relationship with the
legislature is maybe the most important responsibility of the
governor.

JAMES E. HOLSHOUSER JR.:

Well, you can't ignore the fact that they are the ones who
give you the money. Given the fact that when I was there the governor
couldn't succeed himself and he didn't have the
veto, if you didn't understand the budget and how to use that
tool you

Page 28

just missed the most important single
weapon you have in terms of being effective. That process of saying here
is what I want to do and here is how much money it is going to cost.
Sometimes some of the things you want to do don't cost much.
But if they do, you have got to figure out how to get those through the
legislature. And they are programmatic things that have money attached
to them sometimes and sometimes not but they are important. I think the
first session I told the press at the end of the session that we had put
35 major proposals in the legislature and if we got 32 of them, not
always as presented but in some variety or form basically, we were
successful. I don't think I would go back and say that we
fared that well in '75, but not bad all in all.

JACK FLEER:

The

JAMES E. HOLSHOUSER JR.:

I'll expand a little bit on that because in 1975, the most the
governor and the legislature could do given the economy at the time was
to figure out how to retrench responsibly.

JACK FLEER:

Because you had a recession during that particular period of time.

JAMES E. HOLSHOUSER JR.:

Yes

JACK FLEER:

What about the role of the governor in the organization of the
legislature? Did you play, did you participate any, in the selection of
the leadership or in the naming of committee personnel? Did you take any
role of that type?

JAMES E. HOLSHOUSER JR.:

Not a lick. Totally left that to them. Did not get involved in the
selection of even the Republican leadership on both legislative sides. I
just felt that was their thing and the most I could do by getting
involved was probably just get myself in trouble.

Page 29

JACK FLEER:

So if a member of the legislature who is in a position to make committee
appointments were to come to you and ask you if you had any interest in
particular people, would you say no?

JAMES E. HOLSHOUSER JR.:

I guess Jack that is the most hypothetical question I have ever been
asked because it never happened, it never happened. I probably would not
have said no if somebody had come and said give me some help on who you
think would be good here. It just didn't happen.

JACK FLEER:

It just doesn't happen. Maybe it was because you were a
Republican?

JAMES E. HOLSHOUSER JR.:

Perhaps. Your interviews with some other governors who are Democrats will
tell you more about that.

JACK FLEER:

Right, right.

So you were hands off as far as the organization of the legislature was
concerned.

JAMES E. HOLSHOUSER JR.:

Yes. And it is interesting when I think about. The relationship between
the governor and the legislature at the time Terry was governor and
through the time that Jim Hunt's second time now, I think it
has changed fairly dramatically in a lot of ways, some because of
personalities and some because of events. But the ability to seek a
second term and the ability to veto, particularly the last, makes you a
player more in the legislature more than you were at one time. One of
the nice things about being governor when I was, if the legislature did
something that was just really screwy, you could just say that it was
really screwy and there wasn't anything that I could do about
it.

JACK FLEER:

You mean you say that publicly or you just said it to yourself.

JAMES E. HOLSHOUSER JR.:

I didn't do that much of criticizing the legislature publicly,
but you didn't have to sign off on every bill saying that
this bill is okay with me.

Page 30

JACK FLEER:

Now there are other ways in which you could try to influence the
legislature and maybe I can get to those. Did you spend time recruiting
candidates for the legislature?

JAMES E. HOLSHOUSER JR.:

I did. I did.

JACK FLEER:

Raising money for candidates for the legislature?

JAMES E. HOLSHOUSER JR.:

Some, although not near as much as today simply because you
didn't have, I mean the whole nature of campaign has changed
so much. As I think I told you before, about 22 or 23 hundred dollars I
think was the most I spent in any single race for the legislature and
that was only one time. With that exception I never spent over hundred
dollars and that was in a three county district. Now days you have got
people in districts that are similar in size and nature and are spending
$50,000 and $75,000. We use to think that you had to
be out of your mind to think about spending that much money for a job
that doesn't pay any more than it does. I think the public
still doesn't understand quite how it is. But there is change
in the times. There is more money that can be raised. Unfortunately a
lot of it through political action committees. The lobbyists and the
legislature just get worn out with people coming to them with their
hands out both during the session and later. Now the legislature clamped
on some rules about during the session which I think has been a healthy
beginning. But I think that genie is out of the bottle and it is going
to be very hard to get back in. The state has looked at it several
times. But given the constitutional limitations on freedom of speech
which includes the right to give people money to speak, I think you are
going to have to change the constitution probably to do some of the
things that probably would be necessary.

Page 31

JACK FLEER:

Or get a different interpretation of the first amendment of the Supreme
Court which is possible? As far as recruiting people, can you talk a
little bit about how you went about getting people to run for the
legislature as a Republican?

JAMES E. HOLSHOUSER JR.:

Well we talked to them about I needed some help down there and I was
pretty analytical. I didn't spend a lot of time trying to
talk people into running for places I didn't think they could
win. We concentrated primarily on districts where we thought we had a
chance. It is not that we didn't make some effort in other
districts as well because you never know when lightening is going to
strike. Sometimes the incumbent just screws up and is going to get beat
by whoever happens to be there so you would like for it to be a pretty
decent person. I mean one of the worse things that can happen in
politics is electing people unexpectedly where you didn't go
out and get the best people you could and then you have got to live with
the results and I have seen some of that too, unfortunately. But I
thought that was part of my job as "the party leader,"
so to speak and part of that was left over from being state chairman
probably. But if you assume that at least part of running for governor
was the belief that the state needed a two-party system. That was sort
of a natural corollary to that.

JACK FLEER:

And you had some luck except that in 1974 anyway the party
didn't do particularly well because of other circumstances
but mainly outside the state I assume.

JAMES E. HOLSHOUSER JR.:

Just as 1966 and 1972 had been great years to run as Republican, if you
put your name on the ballot you were liable to get elected. In 1974 if
you are on there as Republican you might be the best thing since sliced
bread but there wasn't a prayer for an awful lot of people.
We had a lot of people who were incumbents who got beat through no fault
of their own at all.

Page 32

JACK FLEER:

And did that give you any difficulty in recruiting people for the next
legislature in 1976-77?

JAMES E. HOLSHOUSER JR.:

Things had turned around somewhat but not totally. Gerry Ford was still
going to face an uphill fight for the presidency and as it turned out we
didn't do very well in 1976. We tried hard again on
recruitment of candidates to help although they tended to be a little
bit more focus in 1975 and early 1976 on the statewide ticket and the
presidential thing too.

JACK FLEER:

Did you have other tools that you could use as governor that would
improve your position in the legislature?

JAMES E. HOLSHOUSER JR.:

Those tools in some cases are there and I saw them used when I was in the
legislature. I didn't think I could use them very well as a
Republican with a Democrat legislature. Democrat legislators who
supported the governor's program in the 1960s, a lot of them
fairly regularly showed up with judges robes on or with roads through
their county or whatever or with some key appointment to something that
they wanted, or their wife be appointed to something that they wanted.
And I always disapproved of that but was pragmatic enough that I would
probably have not flinched too bad at the idea of doing that except that
I didn't think I could effectively deal with the Democrat
legislature that way. I believed pretty much in, I started to say
sanctity, because that is just about how I viewed our highway program.
Because I called the chief highway engineer and the secretary of
transportation in the office early on into 1973 and 1974 and said we are
going to try to do this thing right. Set up a priority program for
paving of secondary roads. We are going to talk about what we can do
with the primary road system to knit this state together and that is
going to be where the priorities are. And at the end of the time I felt

Page 33

pretty good about the fact that some DOT
people said that we had done as close to right as you could do it. It
meant turning down some friends who wanted their roads paved simply
because they didn't have many people living on their road as
this fellow over here who had three times the number of people you just
had to say deserved it more.

JACK FLEER:

So what you are saying and I am just trying to understand it myself, for
members who were Republican and in the legislature you would or
wouldn't be reluctant to use those tools.

JAMES E. HOLSHOUSER JR.:

Didn't need to.

JACK FLEER:

Didn't need to for that.

JAMES E. HOLSHOUSER JR.:

I could count on their loyalty. It is one of the advantages of not having
been in power for decades. That got to be something the Democrat
legislators were use to sort of seeing as part of the game and
Republican legislators didn't expect that. Well they knew me
too because I had served with them and they just wanted me to do a good
job.

JACK FLEER:

So that wasn't perceived as part of the spoils. I mean
positively perceived as the spoils.

JAMES E. HOLSHOUSER JR.:

Well we never had serious discussions about that. That is just sort of
how the time was. I have no doubt that Republican legislators were
calling people in higher offices and the people in the various agencies
about friends who wanted jobs. That is something that is going to happen
forever and it should happen forever, because if they know people and
feel like they are good. That is more likely to turn out to be the fact
than any other way. But it is awfully hard to measure on paper how well
folks (will do). We didn't have a civil service and still
don't. The state personnel act is more protective of career
employees now than it was. Frankly state government employees take a lot
of

Page 34

heat that they really don't deserve
for the most part. I found that I didn't have this feeling
almost from day one that I had an entrenched Democrat bureaucracy out
there that was going to try to thwart everything I tried to do. It just
didn't happen. A lot of them were very enthused about the
breath of fresh air, sort of change of scenery kind of thing. You had
some hacks along the way and you tried to move them out gently. When I
was talking about some of our people screwing up, some of our people
tried to do it not gently, mainly just didn't know how to do
it and just did some dumb things. But it was not malicious, it was just
inexperience. It wasn't an effort to free up a job for this
partisan as opposed to the partisan who was in there. But back to the
point though. With the exception of probably helping out some of their
friends who were looking for a job get one, there probably
wasn't much that a Republican legislator was looking for. My
guess is that there wasn't a whole lot of even that because
it was a serious disadvantage and also an advantage in a way that
Republicans had been out of office so long that most of them were
gainfully employed in things that they liked to do. That was not always
true in the mountains in that sometimes the government is the best job
there as opposed to a job you take if there is nothing better in the
private sector just because of economic circumstances.

JACK FLEER:

You had campaigned and in fact spoken a lot regarding road building in
the state that you wanted to take politics out of it. Did that restrain
you in any way from using roads to try to satisfy Republican
supporters?

JAMES E. HOLSHOUSER JR.:

Didn't do it. Just didn't do it. I promised two
Democrat legislators that I would see that the Ahoskie Bypass was
finished. I thought that was important and they had been people that I
had known and had confidence in. I sort of felt like this was a

Page 35

project that had gotten held back by the
engineering people in DOT for some reason. I told them that I would get
that done. I think that was the only road that I have a vivid memory
about where the legislators were concerned. Partly because in July or
June of 1976, I had to send Phil Kirk over to meet with the engineering
people at DOT and tell them that if it wasn't under contract
before I went out of office that they were going to get fired, that they
might get another job later but they weren't going to stay
through the end of their administration. Actually I think we set a
September deadline and it got done. But for the most part I had sort of
viewed the major challenge in transportation was setting up the program
so that everybody knew every fall that this road was scheduled to start
right away, acquisition this year and start construction three years
from now or whatever. It was going to be finished the year and that
overlapping thing just kept going. We talked about finishing all the
interstate highways that were started and we did that. We talked about
having a four lane road from the mountains to the coast which we did
even though there still were some stop lights on down on 70 going
between Raleigh and Morehead City. And there were just several bottle
necks that really needed, to have a section up in Davie County on I40
around Davie and Catawba. Part of that at least because you had a bunch
of Democrats fighting in Catawba about where the corridor was going to
go and not being burden with that, we were just going to say here it is
going. On I95 around Fayetteville, the Fayetteville business community
was just absolutely determined to keep the corridor west of the Cape
Fear River where the business community was going to continue to benefit
and there just wasn't any place to put it. Had to go East.
They came up and plead and plead it. I said we are going to get it done
and this is the only way to do it and we don't want to put it
off and so we just did it.

Page 36

JACK FLEER:

So you felt comfortable with the idea that you had in fact accomplished
this goal of keeping politics out of the road, I mean that is something
in fact you achieved?

JAMES E. HOLSHOUSER JR.:

Well, I have this feeling that on the major corridors, the intrastate,
maybe I should just say the primary road system, that is a good way to
say it including the interstate system, I think we did about as non
political good government approach to that as you could possibly do. I
really feel good about that. And the secondary road program I ought to
give some credit to where it is due. Jimmy Green in the legislature came
up with a plan during the Spring of '73 where a secondary
road council would be separate from the highway commission or the
Department of Transportation Board. They would look only about secondary
roads. I thought it was a good idea, so I said let's do that.
So you had this thing set up, this board set up that just looked after
secondary roads. Each county would be allocated so many miles of
secondary roads each year based on the percentage of the
state's unpaved mileage. And there was a formula system set
up which road ought to have the first priority and on down the line. I
think where I lose my sense of total confidence is that some where down
the line I wouldn't be surprised that we didn't
have some members of our secondary road council that got some roads in
there that might not have been at the top of the priority list. I say
that because in my own county of Wautaga in the '74 campaign,
we got accused of paving a road out towards my former law partners
house. If you knew the land, you knew that it didn't involve
the fact that he was out there. He was a Democrat anyway, as the saying
goes. But when I got looking into it, I realize that it went to the
place of the son of a former Republican chairman. I never did inquire
because it was already after the fact and done as to whether that had
jumped into the priority list somewhere or another. But at least tweaked
the thought in my head that

Page 37

maybe all
wasn't going totally the way that it was suppose to. That
people were still going to be human beings and keep drumming the idea
on.

JACK FLEER:

Well in fact there will be somebody some people who would argue that it
is impossible to take politics out of road building.

JAMES E. HOLSHOUSER JR.:

Well I think it is to some extent. I used politics there in the sense of
that generic kind of politics. I am not so certain that the local guy
sitting down in Podunk county can see the needs of his county and who
really needs the most roads maybe better than all the engineers and the
roads with traffic counts and stuff. There are just so many examples of
abuse of doing it that way. The comfort in the scientific method, using
traffic counts, the number of houses there were there, it is a dead end
road or not, the comfort in that is that you know there is not an abuse
in that for the most part. It may have some casualties along the way
that shouldn't be. But it is not nearly as much potential
there as it is on the other side for abuse.

JACK FLEER:

So when you say you take it in the larger generic sense you are not
talking about partisan politics so much but you are talking about people
trying to influence decisions on a personal basis.

JAMES E. HOLSHOUSER JR.:

Yes because if Joe Jones who is here and his Republican friend is on the
DOT board, or this Democrat has his Democrat friend or to make an easy
case it may not even be a friend, it may just be somebody you know
casually or don't even know at all, and in particular if they
had been a financial supporter of the governor who happens to be in the
office at the time, there is potential for the public to get skewed a
little bit. I kind of think we have seen some examples of that recently.
I think the papers are taking small percentages of the projects that
have been done wrong probably and made it seem like

Page 38

half of them have been done wrong. And I think they have done the
government and the DOT board a serious disservice and I think they have
beat on some professionals unfairly. That is not good for how people
view government people.

JACK FLEER:

The last question I want to ask you about your relationship with the
legislature, maybe is not quite as hypothetical as the one I asked you
earlier. But if you had had the veto power in your term as governor
would you have used it, and if so what on?

JAMES E. HOLSHOUSER JR.:

Well I haven't given a whole lot of thought about that since I
didn't have it. But as I have looked back I would probably
have vetoed the Administrative Procedures Act because I had the sense at
that time that I couldn't slow that down by lobbying against
it and so I didn't fight it. It was the last year of my term
and I was about as lame of a duck as you could get. I mean the Democrat
primary and the Republican primary for governor had already been held
and there it was. I sort of felt like that had the potential to get the
whole process involvement with the governor so entangled…

[END OF TAPE 1, SIDE A]

[TAPE 1, SIDE B]

[START OF TAPE 1, SIDE B]

JAMES E. HOLSHOUSER JR.:

We were talking about the Administrative Procedures Act and the fact that
some people think that there is merit and I think there is in saying
that if you are not happy with the state agency's decision
here is how you go about appealing that. But unfortunately it has the
overall effect of slowing down the process of implementation of things
so badly that I think it serves poorly. It also means that if you decide
that you have

Page 39

made a mistake in a regulation, it
takes between six and nine months to change it. Just because of the
hearings you are required to go through and the things that you have to
file and the chance for input from everybody. And if you have screwed up
you ought to be able to change it faster than that.

JACK FLEER:

Well that is a very major act, I mean the consequences of that.

JAMES E. HOLSHOUSER JR.:

It was, and I will admit that part of the reason I didn't
fight it, if it had been in 1973, I think I would have fought it. I
wouldn't have been as much of a lame duck but it would have
also effected me a lot more. Because I knew that it was going to effect
the next governor a lot more than it did me. I decided I guess that if
Jim Hunt could live with it, that I would let him live with it at that
point.

JACK FLEER:

And he was in the legislature during that time.

JAMES E. HOLSHOUSER JR.:

He was presiding over the senate as Lt. Governor.

JACK FLEER:

Right. Were there any other acts that you would have vetoed?

JAMES E. HOLSHOUSER JR.:

There were some changes in the composition and how some commissions got
appointed. There was more nibbling away at the executive branch during
that time. Some of that had some backup because the court decision since
that. But there was an initiation of appointments to the state boards
and commissions by the speaker of the house and then Lt. Governor; now
it is the President pro tempore of the Senate. So I guess for the most
part for the first time, we had the legislative leaderships starting to
involve itself into having designees on state boards and commissions
which is probably an invasion of the executive branch. The court said
that dealing specifically with the Advisory Budget Commission and its
role changed. I guess I would digress for a minute and just talk about
the Advisory Budget Commission because of its role with the budget.

Page 40

You will recall the way the budget got put
together at that time and since then up until relatively recently, the
state agencies would present their requests to the budget office, would
get them all in form, and bring them to the Advisory Budget Commission.
Then the Advisory Budget Commission would send their recommendations to
the governor. And the governor didn't present his budget to
the legislature. He presented the Advisory Budget
Commission's budget to the legislature with any changes that
the thought well. Most of, the Advisory Budget Commission had members
from the house and the senate ex-officio by virtue of their committee
assignments. The governor had some appointments too. I decided early on
that I would chair that as director of the budget so to speak. It is the
first time a governor had done that since maybe Luther Hodges. I am not
sure he did but I think he did. A little bit of surprise to people who
came on there that I ended up at the end of the table the first meeting
with the gavel. But we also developed a policy council composed of the
budget director, a budget officer, director of planning, a staff person
for this policy council and a couple of people from my office and took
the requests from the state agencies. If there was something there we
didn't like, we would send it back to them and ask them to
look at it again before it came back and went to the Advisory Budget
Commission. So there was, that way the governor put his imprint on it
before it ever went to the Advisory Budget Commission. And I
don't recall sending, you can look at the budgets that went
over there, but I don't recall making any changes to things
that went to the legislature with the possible exception of East
Carolina Medical School. But when the courts said that the Advisory
Budget Commission couldn't have that statutory authority
constitutionally, it was changed to advisory only. But I think something
has been lost because the way it worked by the time you massaged the
agency

Page 41

budgets and put them in there and they did
their job of looking at the revenue picture and all, you not only had
the fact those committee chairmen were going to be aware of what was in
it but they had some of themselves invested too. So it made much more of
a likely partnership between the executive branch and the legislative
branch in the legislative process as it went along.

JACK FLEER:

But did it compromise your role as Governor, in a sense, to have the
authority that you needed over the budget?

JAMES E. HOLSHOUSER JR.:

Well, the way that we worked it I think that I probably had more
authority than my predecessors in a way. By setting up that policy
council to review the agency requests. You started off saying to the
cabinet people these are the things that we don't want you to
do. Now come on with everything else that you think that your various
department heads and division heads want. Then we look at those. It
saved us a lot of problems because sometimes agencies heads would just
being in favor of something that a) was controversial b) I
didn't agree with. It shouldn't be in my budget
request and was going to cause problems over there that you just
didn't have to have in the legislature regardless. So by
screening those out first before it went to the Advisory Budget
Commission, it was much more likely to be a solid document. Now because
of the court decision, the governor is now just sending his own budget.
But when that court decision came along and they got taken out of the
process and since, that is when fiscal research got to take a much
greater role.

JACK FLEER:

Let's turn to talking about your role as head of the executive
branch of government. How can a governor be an effective head of the
executive branch of government?

Page 42

JAMES E. HOLSHOUSER JR.:

Well, it is one of the most challenging things. It was particularly
difficult for us. Because we didn't have a single Republican
in the whole state that had ever been a part of the executive branch
that I knew about anyway, certainly not in a high policy making
positions. We went through just reams and reams of paper looking at
potential candidates for cabinet positions. And I am not sure that every
decision that we made was the perfect choice. You can look back now and
see that some cabinet members did better than other cabinet members.
Some of them were just superb. But given the fact that it was the first
Republican administration, we probably did better than we might have I
guess is the best way to say that. I think I probably delegated less
than most governors should simply out of wariness and there were times
that you had to have heart to heart talks with folks about something
that might be happening. Never had public fights with anybody. We did
have to let some people go, not cabinet people but sub-cabinet people,
who just did some things that weren't right. They
weren't necessarily illegal but they just
shouldn't have been doing it. And when you have got people
who are coming to Raleigh for the first time, personal habits that
weren't noticed out in the hinter lands sometimes get
magnified by the capital press corp. So you just sort to have to deal
with that. But governors end up with the ultimate responsibility for
probably, at the time it was about 60,000 state employees and at least a
dozen of them is probably going to screw up every day some where or
another. I said that wrong. Everyday at least a dozen will screw up. It
won't be the same dozen but there will be that many. That is
one of the little bit of surprises. It shouldn't have been
but it was. The other one was that so many people wanted to see the
governor and nobody else.

Page 43

JACK FLEER:

You are emphasizing the appointments in this initial response. Why is it
that appointments are so important?

JAMES E. HOLSHOUSER JR.:

Well you know that you can't run the whole thing yourself.
Even if you are just brilliant you have got to have some people that you
have got some confidence in. In my case it just took a while to build
that confidence. We had some change over during the time. For the most
part, we laid out in some cases where we wanted to go. That was
particularly true in DOT. The Department of Administration is an
administrative agency. It is not nearly as much a policy making agency.
Cultural Affairs has its own thing it does and has its own constituency
out there. Not many governors are going to be doing a lot of serious
oversight on that even though they get involved a lot. They have
different things involving the symphony and arts of one kind or another.
Different governors pay different attention to them but there are a lot
of things that you can do. But too, the department itself is small. Of
course you don't have any involvement with the Council of
State agencies. Human Resources is just a big can of worms. It has got
such a conglomeration of things. That was the name of it at the time. It
changes every four to six years. I think it is now Environmental Health
and something now I think. And you have had various health agencies move
back and forth between the two departments over the years. We were
fortunate in having some people in a couple of key agencies that had
enough experience in the field and in management that you could have
some confidence about that because there wasn't any way that
you could have oversight everyday on it.

JACK FLEER:

So what kind of criteria did you use in selecting people? What were you
looking for these major appointments that you made in the cabinet
appointments for example?

Page 44

JAMES E. HOLSHOUSER JR.:

Well I am not sure that I can tell you right now what the answer to that
was. Because if I look back at the people that got appointed
particularly the first round, it was looking for people that I had known
personally, that I felt like had good native intelligence plus some
reason for thinking that they would fit with the agency that you needed.
Bill Bondurant for example had headed up a foundation. I had known him
in college. When I talked to him about coming to be the Secretary of
Administration, I just think it blew his mind probably. Every time I see
him he never fails to thank me for that great year he had but he only
stayed a year. He took a year of leave from the foundation and came
down. Of course he was a registered Democrat. We didn't have
many of those but some. I wanted people that I could count on, not just
integrity in the sense of being honest but in having good motives. There
is a distinction there. Jim Harrington for instance took a serious pay
cut to come and be Secretary of Natural and Economic Resources. He had a
background from being the President down at Pinehurst and up at Sugar
Mountain to know both the development side and the environmental side of
that agency. It has been almost twenty years now since we split
conservation and development. I still think it is one of those serious
mistakes the state has made. Because I believe you are much better
having everybody under one boss in that agency instead of having these
folks fighting each other across agency lines. It is partly because so
much of the things that help the environment can be handled at small
cost up front in the development but if you have to do them after the
fact, the cost just gets monstrous. It is much better to have industries
come in to the state and have some problems that the industry knows
about at the same time we are recruiting them. They know that they are

Page 45

going to have to do certain things when they
build a plant and that sort of thing. Now I have sort of strayed from
the basic question.

JACK FLEER:

We are talking about the criteria that are involved.

JAMES E. HOLSHOUSER JR.:

And it was obviously going to require either an interest in that first
Republican administration or just generally public spiritedness, if that
is a term.

JACK FLEER:

It is?

JAMES E. HOLSHOUSER JR.:

Or a combination of those two things. And some people just wanted to be
part of the excitement of things like that and willing to take off from
their business and come and do this. And I think that is going to be the
case in almost every administration. Not all the people in every
administration can have that motive but a lot of them will.

JACK FLEER:

Did you have any situations where you wanted someone to come in, you made
the decision that you wanted to appoint someone, but you ran into either
concerns about the pay cut that they would experience or the public
scrutiny which is inevitable in a position like that?

JAMES E. HOLSHOUSER JR.:

Well on the first part, we had some people we asked to come in that
couldn't or wouldn't. Just said no. And sometimes
it was because it came at a particular time when they
couldn't afford to leave their business because there
wasn't anybody else there to handle it and they were in the
crucial state of expansion or whatever, change.

JACK FLEER:

Not financially afford it but just the conduct of the business?

JAMES E. HOLSHOUSER JR.:

Right. I suspect that almost everyone that came took a pay cut and I
think that is probably still true. Although the cabinet
secretary's offices have improved. They are getting close to
$ 100,000, so that has probably changed. We didn't
have anybody that I know about scared of a spotlight. I don't
think that spotlight was near as common

Page 46

then as it
is now. Jim Martin probably went further than I would have in terms of
the executive order he signed on what his people had to disclose. I know
Jim Hunt has gone further than I would on this latest thing about
voluntary boards and commissions. I think they are going to have a hard
time getting people to serve on the boards and commissions because most
of them are not going to take that public bath. I say that from the
personal experience that when Gene Anderson during the campaign, my
campaign manager, suggested that we come out with a proposal that we
would disclose all our income, balance sheet and all that and suggested
all the other candidates do it only because I was the poorest one around
I think, and would do that every year if I got elected. I just thought
the whole thing was nuts and didn't want to do it. And he
said you have got to do it, you have got to do it. So I finally agreed
and felt like I was literally just stepping naked into a bath right out
there in front of the spotlights. And we released that tax return every
year and of course when 99% of your income is what you are getting from
your salary as governor, that is not that bad of a deal. And everybody
knew you didn't have time to be out messing around making
money on the side when you were in that job anyway or
shouldn't. So it didn't turn out to be that bad of
an experience for me, but I remember how I felt at first. I think that
is how the average person would feel and they are not going to have the
chance to serve as governor. All they are doing is serving on some
Podunk commission and I don't think they are going to do
it.

JACK FLEER:

But in terms of recruiting other people, you didn't make that
requirement?

JAMES E. HOLSHOUSER JR.:

No and wouldn't now I don't believe. I think this
is one of those cases of sort of overreacting to press demands that come
about a problem. And I have to tell you I sort of understand how that
is. Because when we went through the energy crises, may

Page 47

have told you this before. We finally did a statewide TV
message about proposing a half dozen or dozen different things. But I
decided even though I thought it was nuts it was going to be terribly
hard to enforce; but if you didn't put in there about certain
if you had odd number tags being able to go to the service stations on
certain days of the week and even number tags on other days of the week
and if you didn't do that the press wasn't going
to be satisfied. They weren't going to think, because that
was being tried in several states. That seemed to be a common thread in
all the stuff leading up to the decision making that people talked
about. And I finally decided that I don't think this is going
to work. I am going to put it in there simply because I don't
want to have everybody focusing on that. So I can understand how the
press sort of drives you into something occasionally even if you think
it is crazy. In this particular case, I think it is crazy. Because what
you are doing is you are keeping out whole bunches of good solid honest
people from helping in the state government out of worry about the small
handful of bad apples. I would rather take my chance on those, on the
downside risk and try just in some other way try to minimize the bad
apples. And in DOT that is not that hard. I don't think you
need financial statements for DOT. I think you look at people and see
what they do, see what kind of persons they are. It is a reasonably
small board and you ought to be able to find enough to get solid people.
When you pick certain kinds of people, I shouldn't say
certain kinds of people, when you pick people who have large
landholdings, it is extremely likely that what is in the best interest
of their highway division very likely is going to benefit them in
someway or another but it is going to look like they did it to benefit
themselves rather than because it was the right thing to do. And you
need a process that screens out that potential somewhere or another.

Page 48

JACK FLEER:

But disclosure statements wouldn't do that?

JAMES E. HOLSHOUSER JR.:

They don't. They don't.

JACK FLEER:

One of the factors that is related to this whole appointment business and
I don't know if it became important to you in selecting
either your cabinet heads, secretaries, or your personal governors
office, is the question of bringing in people who had been involved in
the campaign. What was your policy on that and what is your evaluation
of whatever that policy was?

JAMES E. HOLSHOUSER JR.:

Well I suspect that almost everybody who is involved in a staff position
on a campaign wants to go in with the governor if you win. A few
don't, in that they may have interrupted their college
education or they may have been, or they may have left college because
of some other reason, and then decided to get involved in the campaign
but decided to go back to school. For the most part though that is an
exception. For the most part, they want to come into the government. You
have to resist the temptation to over reward those folks because they
have given their lifeblood for you in a way. In our case I know it was
true. Because it was, while as I have told you earlier, we had a
combined staff with Nixon and Helms people for certain parts of this,
there were certain people just on our payroll. And when our payroll
started running out in September, you had this guy get kicked out of his
apartment so he would have to move in with his buddy over here and by
election day we had the entire staff living in one apartment, just to
keep them off the street.

JACK FLEER:

What a wonderful story.

JAMES E. HOLSHOUSER JR.:

I mean it is communal living at it worse. It wasn't quite as
bad as it seems in that most of them were on the road almost all of the
time. It was just a place

Page 49

they just sort of
headquartered. When they were on the road, they were spending nights
with some county chairman some place. Because everybody knew the
campaign was so poor and all of them had credit cards that were building
up and getting cancelled and this sort of thing. So the first job after
the campaign was to get everybody into decent housing. Talk about a
campaign run by the homeless shelter. There is always a nervous period
because you can't tell everybody the same day you are going
to get a job. So some people who get a job and then everybody left says
when am I going to get named to something and that sort of thing of an
anxiety period. We did not pick a single cabinet position out of the
campaign staff. A lot of them, several of them were volunteer regional
coordinators or county coordinators and that kind of thing. But really
they had been business people out there. We took several of them into
governor's offices, some as just not much more than
stenographers, receptionists. Some of them we set up in the ombudsman
office which I thought was a pretty good fit where people could come in
if they weren't getting the response from the agency and that
sort of thing. Although the people who headed that office had not been
involved as staff people of the campaign. Gene Anderson was a senior
adviser

JACK FLEER:

And had been campaign manager.

JAMES E. HOLSHOUSER JR.:

And had been campaign manager. But I brought in Phil Kirk to be the
Administrative Assistant. And I told both of them very candidly that it
was sort of a balance kind of thing that I didn't want them
fussing, that I was going to listen to them both. There
shouldn't be any constant tug for power along the way because
we just didn't have the time for that. But I expected Gene on
the other hand to be my eyes and ears and if something was going wrong
out there or you saw a potential for scandal to let me know

Page 50

about it and I would do something about it before it broke.
If we had to move somebody out which we did in several places.

JACK FLEER:

So he was sort of your reality check in terms of trying to make certain
that if something is developing out there that you ought to know to tell
you.

JAMES E. HOLSHOUSER JR.:

That is right and it wasn't at all that came to him but that
was one of his major assignments. He also had the job of keeping in
touch with all of the Republican county chairmen to see if their
favorite nephew in fact was qualified for DOT or the job down at the
asylum at Morganton or whatever that they would get some people looking
about it. Not necessarily getting the job but just looking at it. So
several of them went in as assistant secretaries which is the third
notch down in the agencies and that varied in responsibility from agency
to agency.

JACK FLEER:

Still kind campaign people going in to those positions.

JAMES E. HOLSHOUSER JR.:

That is right. I think anybody who had worked on the staff was offered a
position somewhere in the government and I think all of them took it. A
couple of them may have gone back to school.

JACK FLEER:

But you did not put any campaign people into positions of department
secretary.

JAMES E. HOLSHOUSER JR.:

No.

JACK FLEER:

And was that, why was that?

JAMES E. HOLSHOUSER JR.:

Well part of it was because, almost all of them were really just kids. We
had, we had four who had just finished at State in the spring. I suspect
the average campaign staff age was probably twenty two. I take that
back, on not putting anybody in. Tenny Deane who had been a near
classmate or classmate at Davidson I don't remember exactly.
I think he was a couple years behind me. He came on board in mid summer
to

Page 51

help with finances. And after the election he
was made Secretary of Commerce, which at that time was a whole different
agency than it is now. Because then it was sort of an umbrella group
under which all the regulatory agencies got stuck because we
didn't have anywhere else to put them when they reorganized
state government in 1969. It wasn't anywhere near the kind of
role as a division head that other cabinet agencies, other cabinet
secretaries, were. Much more of watching the paper clips kind of thing.
Just a different kind of agency and it changed it. It still has those
agencies under it but it has economic development and some other stuff
now. I need to back up a little bit. George Little worked in the
campaign about the last six weeks helping raise money. Frankly I
don't even know if he got on the payroll but he was going
full time. He ended up being deputy secretary number two man in Natural
and Economic Resources. And he was up in his mid thirties I guess. Tenny
like me was in late thirties. We were all pretty young. But the fact was
that most of the campaign staff didn't have the experience to
be really qualified to the cabinet secretary at that time.

JACK FLEER:

Do you see any inherent or generic problem with having campaign people,
obviously you have in terms of the difference between campaigning and
governing. Obviously you have a kind of sense of obligation these people
have worked for you hard and made it possible for you to be there, but
do you as you think back about it in terms of sort of evaluating the
policy do you see anything inherently contradictory between these
things, obligations?

JAMES E. HOLSHOUSER JR.:

Well a good campaign worker doesn't always make a good
governmental worker. Because there is a lot of times that government can
be sort of dull after the excitement of working in the campaign and
there is the potential for them to get into

Page 52

trouble because it is too dull or something. I am inclined to think that
this is one of those things that you can have your cake and eat it too.
I think it would be, just from a human standpoint, terribly unfair to
people who have worked for you for a year or a half of a year or
whatever, and have the election over and say well I'll see
you. I just don't think that is good human behavior. At the
same time, I think if you are up to the job of being governor you ought
to have enough sense to figure out what they can do in the government
and try to get them into that kind of position. And if there
aren't twenty positions out of 60,000 that these folks can
fit into, you haven't looked very hard. The trick is not to
put them in a position where if they have a weakness it can cause a
serious shortfall in performance.

JACK FLEER:

Now one of the things that some persons who have served with governors
have talked about is something that I alluded to a little bit earlier
with your reference to Gene Anderson, that there is a need to have
someone in the administration at an important position, level, to be
able to tell you either when something is going wrong or maybe even when
you are doing something wrong. 1) Do you agree with that and 2) Did you
have such a person and 3) How did it work?

JAMES E. HOLSHOUSER JR.:

I totally agree. I think there is a terrible tendency for folks not to
tell people in high elected positions what they honestly think in terms
of, not necessarily, misdeeds. I think that is the wrong term probably,
an errant performance of somewhere another. If you don't have
anybody but yes people around you, then you are going to find out in the
newspaper that you have done something wrong when it didn't
have to end up in the newspapers. Or you are going to think that the
newspaper is just beating on you when they shouldn't. But
when your friends are good enough friends to say to you, you

Page 53

need to do something about this. But I watched, I
got a good experience on this, from 1969 to 1971 when I was the
Republican state chairman. I would go to the state chairmen meetings and
particularly the southern Republican chairmen. I would hear all of them
gripe about this or that and then they would go in to meet with the
President and nobody would open their mouths. I remember thinking to
myself this is being sorry friends for Richard Nixon. But people just
get a little scared to do it and that is going to tend to be the way
with people from outside. Every governor is probably well served by
having a kitchen cabinet with a dozen people from around the state to
come in and just talk honestly. I am not sure how many of them
effectively do that. I don't think I did very well. But I had
some good friends, some of whom were in the legislature still to let me
know if something was happening. And our staff people were by and large
pretty irreverent which I think was a very healthy thing. It was never a
lack of respect but a lot of kidding around the office. I never did
discourage that and wouldn't yet. Because if you set it, a
lot of that comes from the top, if you set an atmosphere where everybody
feels scared to tell you anything you have done shot yourself in the
foot.

JACK FLEER:

So you had the kitchen cabinet or some form of that.

JAMES E. HOLSHOUSER JR.:

I say I don't think, when I started off I got some people
together during December after the election and once in January but it
sort of fizzled out. Mostly my lack of attention on that I think. But
the people in the office and the cabinet secretaries and some key
legislators that I had known would let me know if they thought there was
a problem.

JACK FLEER:

Another group that you have relationships with as a chief executive is
the Council of State, separately elected, independent departments. How
would you

Page 54

characterize the relationship that you
had with the members of the Council of State. If I remember with very
few exceptions, all Democrats.

JAMES E. HOLSHOUSER JR.:

That is right. We had a couple of instances where a member of the Council
of the State died, one instance where they resigned and you had
Republicans temporarily and they lost it at the next election.
Fascinating since I have left office over the last twenty years at one
time or another, I have had at least four or five Council of State
people or former Council of State people tell me that they had the best
relationship with me that they had with any governor, Democrat or
Republican. And part of it is that I didn't try to invade
their turf too much. Actually some of them, not at all. That I respected
them because they had gotten elected as officials even though I am not
sure Council of State people really are elected in the same way that
governors are elected. Because people who don't know them; it
is mostly a name ID thing. Any rate. We had a couple of instances where
it got a little tense. Bill Bondurant made an innocent mistake during
that one year of getting ready to do some renovation in our offices and
was going to seal off a back entrance that Thad Eure always used to get
into his office. Bill didn't tell me about it or would have
told him probably would be a good idea even though it made sense. Thad
got upset and called Bill and Bill was a little snippy with him. We
ended up with a major discussion about it at the next Council of State
meeting. So I had to have some general policies about the quarters in
which the Council of State members were housed. That is just one of
those things that happens. During the time that Robert Morgan was the
Attorney General you know and was asked to investigate the campaign
finances that we had had, it was strained in the sense that you can do
that kind of thing without being strained. But Robert knew me and I knew
him and it came out as clean as

Page 55

a whistle in the
final analysis and he had done what he felt like he had to do both
governmentally and politically so that was a short lived thing. Other
than those two things, I don't remember any thing where we
really had problems and as I indicated earlier there were times when
people in the legislature started meddling with the Executive Branch
powers. When you meddle with the governor's staff, you also
meddle with the Council of State staff and they helped slow down some of
that potential invasion.

JACK FLEER:

Now when putting together your budget, those budget requests from the
individual departments went to the advisory, or to your office, and then
to the Advisory Budget Commission but you said earlier that you had a
policy council which if there was something that you felt or you were
not comfortable with or needed further thinking or something that you
would send it back. Would you do that with the departments in the
Council of State?

JAMES E. HOLSHOUSER JR.:

We sent their budgets on as they were presented. And I am trying to think
back with Craig Phillips' case with the education budget
whether we had anything. And I am inclined to think that that only
happened in that first year where we were adding on to Bob Scott and the
Advisory Budget Commission's budget. Because we added some
things to Craig's budget as we did to the community colleges
and parks and some other things. But I think I sort of felt like that
unless there was something just contradictory to what we were trying to
do someplace else that it was sort of their prerogative. They had gotten
elected and it was not up to me to say.

JACK FLEER:

Now in the area of education there is a particular problem because the
department which the superintendent of public instruction heads is
separately elected, more or less independent. Governors as you did have
very strong feelings about

Page 56

education policies. You
said that you thought it should get the lion share of the budget for
example.

JAMES E. HOLSHOUSER JR.:

Although that included more than just the public schools.

JACK FLEER:

Right, I understand that. But education certainly was an important part
of whatever budget you presented and education policy is often a
publicly debated and discussed area of public policy. What happens in
those cases where you have potential for conflict between a separately
elected person and the governor in your example?

JAMES E. HOLSHOUSER JR.:

Well I think in our case the nature of the process at that time and what
Craig's budget sent over, Craig always took the position that
he was going to send over everything he could think of and it was up to
the legislature to pare it back and I just didn't get in the
way of that, although we had plenty of influence with the legislature on
where we thought the priorities should be. We've got a
terrible structural problem with education, there is no question about
it. It became far worse later than it was then. And if I had my druthers
and just could wave a magic wand, I would not have an elected
superintendent but have a superintendent appointed by the state board.
You could get two or three different opinions about how that board ought
to be structured, but mostly by the governor. Simply so that you have
clear lines for accountability and authority. Because what we have got
is just a mess and it depends on, the structure depends, the success of
the structure totally depends on the ability of the people who are there
to get along with each other and when they don't it is just a
disaster. And we have just seen plenty of examples of that. We got
probably the best situation right now that we have had in that Mike
Ward, professional educator, seems to have the respect of the education
community as well as the legislature. While we have got a mix of
Republicans and Democrat

Page 57

appointees on the board
that is not bad at all particularly with a split legislature. They seem
to be getting along pretty well. And so the personalities right now are
making it worse. But the system shouldn't require that. The
system is flawed.

JACK FLEER:

Institutionally there is a flaw.

JAMES E. HOLSHOUSER JR.:

That is right.

JACK FLEER:

Individuals can make it work.

JAMES E. HOLSHOUSER JR.:

And just have to.

JACK FLEER:

Are there other areas where you have experienced any of that kind of
conflict or potential for conflict, you said you really
didn't have that much conflict?

JAMES E. HOLSHOUSER JR.:

Not even close, not even close. You have got little things that happen.
In our case we had some conflict when the secondary road council and the
highway people, not because of their assignments, because both of them
were going to be getting calls from Joe Doe citizen who
didn't know exactly what the responsibilities were and so
sometimes things got crossed up that way. But that was just miniscule
compared to what we have in education that effects a huge part of the
state's future.

JACK FLEER:

So with the Council of State departments and the Council of State
members, you don't see other major areas for potential
conflict between a governor and elected executives?

JAMES E. HOLSHOUSER JR.:

That is right. And the time to change that was when Bobbie Ethridge was
getting to run for Congress and there was an opening there. When they
didn't shorten the ballot that way at that point, they just
missed a golden opportunity I think. And usually you have to do things
like that when you have a window and I think it is closed right now.

Page 58

JACK FLEER:

Under Governor Scott there was a new executive group created called the
Executive Cabinet. This was, as I understand it from reading the
literature and talking to Governor Scott about it, an effort to try to
bring some coordination between the departments that have appointed
heads and departments that have elected heads. Did you find that a
useful concept? Did you use it?

JAMES E. HOLSHOUSER JR.:

Didn't use it at all. As a matter of fact, I am not sure that
I was aware that he had use it.

JACK FLEER:

He had created it but it was near the end of his term and so I
don't think it was a major factor in his administration.

JAMES E. HOLSHOUSER JR.:

That is right because it would have been a creature following
reorganization of state government which I think was a very important
and good thing and still serving well.

JACK FLEER:

The reorganization was good and important and still serving well.

JAMES E. HOLSHOUSER JR.:

Yes because before that you had umteen zillion people reporting directly
to the governor. It was just crazy. And of course reorganization was one
of those politically correct things that swept the country in the late
1960s but not without some merit. Just because it was politically
correct does not mean it was wrong. So I supported it as a legislator
and thought it was a really good thing and I think it has probably saved
the lives of several governors since then. And what you found during
that process, everybody was in favor of it except you should leave their
agency alone. Commerce got created in a sense because you
couldn't figure out anywhere to put some of their agencies
but you wanted them under something. Wildlife ended up maybe sort of
floating out there by itself simply because everybody was afraid to
touch it. But we had regular

Page 59

Council of State
meetings every month partly as a statutory necessity in that certain
things require the Council of the State to act under statute. So you got
them together every month to let the Department of Administration bring
in everything that required approval and we would have some socializing,
but just talk generally. But mostly that. And we did something that I am
not sure every administration has done, maybe none of them has done.
Once a month we had a member of the cabinet host a reception and dinner
for the others at their house. So you got the cabinet people together
once a month and tried to make sure that everybody felt more a part of
the team that way than off doing their cabinet thing by themselves.

JACK FLEER:

By cabinet you're talking about appointed people not the
elected people?

JAMES E. HOLSHOUSER JR.:

Right. People tell me we had a sense of togetherness in our
administration that has been fairly rare. Part of that is just that we
were all hanging on to survive. But part of it was because we really
made an effort to be a team.

JACK FLEER:

What was the reason that you didn't use that executive cabinet
concept of bringing together elected heads of departments and appointed
heads of departments?

JAMES E. HOLSHOUSER JR.:

Jack, I am not sure there was a conscious decision about that. If I made
it, it was probably made unintentionally simply by not doing it or not
by default. But it was also that I decided pretty early on that I was
going to leave those Council of State people do their own thing. But
anything I did had the potential to look like I was meddling in their
departments, trying to grab power so to speak. Frankly I had my hands
full of what I needed to do within the branches of government that the
governor controls.

JACK FLEER:

Now it goes unsaid here that your appointed people were substantially
Republican and the elected people were substantially Democratic. Some
people argue

Page 60

that that in itself prevents this
from being a potentially useful way of bringing about some coordination
and communication within the executive branch. Would you subscribe to
that?

JAMES E. HOLSHOUSER JR.:

I think probably not. It depends on the individuals. I don't
think there is an institutional barrier that can't be
overcome. There's a personal example. Jim Graham was Phil
Kirk's second cousin or something like that. I had been in
the legislature with several members of the Council at State. Jim
Harrington for instance had been in the National Guard and he had been
in water resources studies with people in the past. I had known all of
the Council of State people when I was in the legislature just because
they came over to present their budgets. Some of them were different
than others. It has always been involved in personalities. I am not sure
anybody was ever going to get John Ingram to be a team player about
anything for instance. You saw a lot of laws changed that
shouldn't been changed that was understood why the
legislature changed them during the time he was insurance commissioner.
At the same time Edwin Gill and Harlan Boyles since then always ran one
of the tightest shops around and I had no trouble picking up the phone
and calling either of them. I guess Gill who was there the whole time I
was governor. I knew Harlan well. I would pick up the phone and talk
with Ed Gill and have him bring some of his people over to talk about
the state's fiscal picture and whether there were certain
things that should be done or shouldn't be done. Because they
had been there through thick and thin. Even though it had all been
Democrats, they had dealt with bunches of governors. I think their first
loyalty was to the state not to the Democratic party.

Page 61

JACK FLEER:

So the means of coordination that you found useful was simply personal
contact with these people in these offices rather than getting everybody
together once a month or something like that.

JAMES E. HOLSHOUSER JR.:

That is right. I mean we got together but not those two groups together
and those agencies don't overlap in responsibility all that
much. You have got Revenue and the Treasurer's office I think
comes the closest. I am sort of trying to think. Agriculture and Natural
Economic Resources to the extent that you had the conservation side of
that had some need for coordination. And the fact is too that when you
start moving down about three or four tiers in every agency you are
going to find people there who has been there in and out through
administrations who are going to know each other and know the people in
the other agencies who were in the same levels. There is a fair amount
of subsurface coordination of things that we have talked about
people.

JACK FLEER:

Another person or position rather that you have a relationship within the
executive branch as governor is the Lt. Governor. In your case that was
Jim Hunt. How would you describe that relationship?

JAMES E. HOLSHOUSER JR.:

It was good. I have told a lot of people that and they don't
understand it and I have teased him about it. Jim would stand up about
once a month and would just give me hell about something. I mean he had
to keep his Democrat credentials in. He was getting ready to run for
governor and somebody was going to challenge him in the primary. He
couldn't dare to be a Republican pawn. But most of the things
that he stood up and talked about weren't really all that
important. While nobody loves to be fussed at, everybody wants to be
universally loved. But when the chips were down, I could call and tell
him about a bill that either even needed to be killed or needed to be
passed and he

Page 62

would help. We talked and had lunch
or breakfast periodically, not as frequently say as the appropriation
chairmen in both houses. But it was by and large a good relationship and
it made it easy when he got elected to make that transition period to
let him put his budget imprint on the budget that was going in 1977. He
and I didn't agree on everything and still
wouldn't necessarily. Right now, he probably has moved to the
right where I am where as before he was well to the left of where I was.
I mean I have stayed in the center, and everybody else has moved around
me. Don't know what has happened. I find it totally confusing
at times.

JACK FLEER:

But you say that you actually could and did call upon him for assistance
in the legislature.

JAMES E. HOLSHOUSER JR.:

Yes, and I didn't try to make an everyday habit of that. I
mean you sort of picked your places where it makes a difference
sometimes where you can't see any other way to get it stop.
But I don't remember being turned down any. He has asked me
since during his term as governor to do several things that were
important to him and I have done them all.

JACK FLEER:

Do you feel that based on your experience those positions should be a
team in the sense of being elected on the same party, on the same slate
so to speak?

JAMES E. HOLSHOUSER JR.:

Well I tell you can get day long seminars with people talking about that
particular issue. In my case it worked much better having a Democrat
there because of the things that I have said. Whereas if it had been a
Republican as my teammate, he wouldn't have been nearly in a
position to help. Now Jim Martin and Jim Gardner sort of ran as a team
in 1988 on the idea of having a Lt. Governor help the Governor. So a Lt.
Governor gets elected and they immediately stripped the office of his
powers in the

Page 63

Senate. I guess that is what would
have happen in 1972 if that had been the case if you had a Republican
and Democrat. Part of that is just your raw power of politics. And at
the same time you have got to realize that they had talked about doing
and got closer to doing the same thing with Bob Jordan as Lt. Governor.
So it wasn't just a partisan thing, it was an institutional
thing. I mean we heard a lot of hollering about it being just
partisanship but I think that it was taking advantage of the opportunity
while they had a political situation that let them do it. That was a
little bit the same way as annual sessions when I was elected. I took
the lead on that in December when we had that dinner I was talking about
before anybody got sworn in. I told them that I hoped they would
consider annual sessions so that they could review the budget annually
instead of having to adopt a 2-year budget. That part still makes sense
but everything else about that even-year session probably
doesn't make sense.

JACK FLEER:

It was a good idea that was compromised in the process.

JAMES E. HOLSHOUSER JR.:

On the philosophical thing, it sort of made sense that you would have a
Republican team run. But people tell me in the states where that is done
that this a lot more complicated than it seems. That in places where you
have to run from the beginning as a team almost invariably a
gubernatorial candidate will pick his lieutenant gubernatorial
candidate, somebody who is different than he is in order to try to
expand the base for the primary which means you don't
necessarily have a total ally over there if you both get elected. The
more extreme those go the worse it is. On the other hand if the governor
picks a Lt. governor after he is nominated, if he just then decides to
pick a Lt. Governor candidate for the Fall, he may view a different kind
of equation but it is still going to be the same premise. Somebody to
help him get elected as opposed to help in

Page 64

government. I am still sort of just inclined to say let the public vote
for the best person regardless for each position.

JACK FLEER:

Now some people who make that argument that they should be a team think
of the Lt. Governor as being a part of an administration.

JAMES E. HOLSHOUSER JR.:

And that was the argument with Jim Gardner in 1989, exactly. He was part
of the executive branch.

JACK FLEER:

And I assume you didn't take that position towards Jim
Hunt.

JAMES E. HOLSHOUSER JR.:

No.

JACK FLEER:

As Lt. Governor that is.

JAMES E. HOLSHOUSER JR.:

That is right. I think that was the case before and since until Jim
Gardner came along. Because that was the first time you had had a Lt.
Governor who wasn't a part of a majority party in the Senate.
I think Pat Taylor and Bob Jordan hadn't been viewed as part
of the executive branch. As a matter of fact until maybe Jim Hunt was
the first full-time Lt. Governor.

JACK FLEER:

That is right he was.

JAMES E. HOLSHOUSER JR.:

I always thought we made a mistake with that.

JACK FLEER:

Making it full time?

JAMES E. HOLSHOUSER JR.:

It only passed the committee by one vote in the house and I voted against
it. I still think it was a bad idea. Just not enough to do anything more
than run for governor which is what you have got your mind on all the
time just about.

JACK FLEER:

That certainly has created a situation where it is an inevitable jumping
off point for a campaign. It has created a situation where, say under
Governor Martin, clearly it was the same party but I do believe there
was some effort to try to create an executive role

Page 65

like a drug cabinet for example for Lt. Governor Jim Gardner. But I
guess a governor always has the concern, or some governors at least
would have concerns, that if you create too much of a role then this
person becomes a competitor.

JAMES E. HOLSHOUSER JR.:

Well in that particular case you wouldn't become a competitor
for reelection and if Martin was serving in the second term he
wasn't going to be able to run. You have to worry at times
whether they can be a competitor in the public arena and an influence in
the legislature.

JACK FLEER:

That is right and in that particular case I believe there was an example
there where Lt. Governor Jim Gardner proposed at least some of a
different budget than from what Governor Martin did. He had some
different ideas about what should have been done there.

JAMES E. HOLSHOUSER JR.:

To tell the truth I can't remember.

JACK FLEER:

I believe that is the case. So that in itself sets up some kind of
competitive situation where you have got two different Republicans
presenting different budget ideas to the legislature.

JAMES E. HOLSHOUSER JR.:

And I went up and worked with Gardner in 1989. Probably
shouldn't have. Just sort of left my law practice half
dangling.

JACK FLEER:

After he was elected and became the lieutenant governor.

JAMES E. HOLSHOUSER JR.:

That was right. It sort of stunned me that he asked me given the fact
that we had had that history and all. At the same time I tried to help
in campaigns if I could. But during the time that I was there I
don't recall this thing about the budget that you are talking
about. But it may have happened after I left.

JACK FLEER:

May have I don't recall exactly when it was.

Page 66

JAMES E. HOLSHOUSER JR.:

He had some serious reservations about the tax increase Martin was
proposing for the public schools and I told him at the time that if I
were there I would be for that. But I had to tell him also I had never
voted for tax increase in my life. Always easier to tell the other guy
what to do.

JACK FLEER:

Well that is really what I was referring to the differences in taxes is
basically what I was referring to.

JAMES E. HOLSHOUSER JR.:

He eventually came out and supported that being dragged all the way just
about. He really didn't want to do it.

JACK FLEER:

Now we talked a lot about the role of the governor as an executive leader
in budgeting and you made what to me is a very important comment and I
wanted you to elaborate on it. You said, if I understood you correctly,
that you thought the budget was the most important tool that a governor
has and could you talk a little bit about why you believe that and how
that is the case?

JAMES E. HOLSHOUSER JR.:

Well even though the veto has seriously changed the equation in terms of
the governor's participation in the legislative process
itself. He has got a lot more ability to directly influence the
legislature now than he did when I was governor. Because even though you
might veto something and have it overridden, the legislature has to get
exposed and experience serious scrutiny of things that they have done
and they don't like that. So it puts the
governor's lobbyist in a position to really negotiate on
legislation. And Clinton does a lot of that as well with the Congress.
So I think that has changed. But in the overall scheme of things, given
the limitations on the veto where the budget is concerned, to the extent
that the legislature will usually give you things that you want that
don't cost money, your ability to get money from the
legislature for things that you want

Page 67

to do that do
cost money is probably the key to your success. If you are fortunate you
are going to have legislative leaders that agree with your idea on those
things or at least aren't willing to fight you on them. If
you don't understand the budget process I think you just
start off behind the curve in terms of getting from point A to point B.
Because if you know what you want and you can't wake up the
legislature and they haven't given it to you, then you have
really done bad. Most Democrats governors had the advantage of being
their party leader in the office of governor and legislatures tended to
rubber stamp that. I knew it was going to be especially challenging for
me as a Republican, particularly being the first Republican, because
they wouldn't do that automatically like they had done with a
Democrat. And if Skipper Bowles had gotten elected they would have gone
along with him. So we had to be, just had to be extra sharp on how we
went about it and I think we were.

JACK FLEER:

How much discretionary budgetary resources did you have as a governor in
the sense that decisions really could be made without them?

JAMES E. HOLSHOUSER JR.:

You have the authority that is in the Executive Budget Act as the
director of the budget to move money around. There are some limitations
on that though. But it is much more flexibility than you have in some
states. I had one of my staff members go to work with Pete DuPont,
Governor of Delaware after we finished our term. She said that in his
office he couldn't buy a typewriter without the approval of
the legislature, I mean signed off approval. So if something broke he
went out and paid for it out of his pocket because he
couldn't wait for the next legislature to come around to do
it. North Carolina's executive budget act is the key to your
ability to get along because you always have things that happen
unexpectedly. CP&L or Duke raises their power rates and your

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electric bill goes up. While you have got the
contingency and emergency fund to help with some unexpected things
particularly natural disasters, it is really pretty small. I think it
was only a million and a half-dollars during my time. It should be
larger now but I don't really know. You have got a lot more
authority than people realize as director of budget. I guess that is one
of the reasons that got us irritated when I was in the legislature, the
fact that this money kept moving around from time to time. At that time
you also had a significant amount of discretion in Coastal Plaines
Commission money and Appalachian Regional Commission money that was
coming from the federal government. Most of that has dried up if not
totally pretty much, as has the whole federal grants operation. But for
instance when Old Maine burned down at Pembroke that had been the
original Indian building that started the campus. The Indians had a
really emotional attachment to it. I knew before they had had a
controversy before I was elected. When it burned that made it worse. I
called Bill Friday the next morning and I said I know you have got some
people on the campus and probably in your administration that would just
as soon scrape off the ruins and put a new building there and that makes
a lot of sense. But there is too much history and emotions about this
building. I'll get you some Coastal Plains Commission money
for some planning and examination of how to rebuild it as opposed to,
because the walls were still standing there, how have to leave the walls
there and build in around it as opposed to putting up a new building. Of
course Bill being the pragmatic guy he was, he said I will take your
plan up.

JACK FLEER:

Was a nice offer wasn't it?

JAMES E. HOLSHOUSER JR.:

It was. And that again his folks, Dr. English the Chancellor down there,
President at the time, no Chancellor at the time, and some of the people
at Chapel Hill

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had been wanting to raise that
building already and had a bunch of the Indians upset about it. I had
told them that I would see to it the Old Maine did better. So when that
happened it sort of became an emergency item and Coastal Plains money
was probably not designed to plan for a Pembroke building. But you had
discretion about it.

JACK FLEER:

It was useful as governor, I mean you do have that kind of
discretion—

JAMES E. HOLSHOUSER JR.:

That is right.

JACK FLEER:

There are political scientists who look at the office of governor in
North Carolina and say that it is among the weakest offices of governor
that exist among the fifty states. When you were serving and since then
would you agree?

JAMES E. HOLSHOUSER JR.:

Legally I would agree. On paper that is how it was. But again coming back
to my premise if you can control the budget and you have got flexibility
to move money around, that gives you a great deal of power to do things
that don't show up in the constitution or in the statutes or
in the appropriations bill. When you have got that, that is a lot of
power I think. If I had to choose I would a lot rather have budget
flexibility than the veto. Because the budget flexibility there is no
down side; with veto you have got to take the blame for everything too.
Plus you can't directly influence nearly as much because that
flexibility is not shared power.

JACK FLEER:

Your referred earlier to these efforts.

JAMES E. HOLSHOUSER JR.:

If you will recall and this has to do a little bit with Bully Pulpit and
positioning. When Terry Sanford got the School of the Arts started with
foundation grant money, he came to the legislature in 1963 when I was a
freshman. I voted against it just because of the process in which it had
been done. We really didn't have any choice but to give the
money for the continuing operation but I just thought it was very bad in
principel.

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It was just sort of a protest. I knew
it was going to pass. I have been a supporter of the School of Arts for
a long time. But that is the kind of thing a governor can do that never
shows up on the statute books. But legally at that time it was probably
one of the two weaknesses in the country. Even though that is on paper
there are also some other things that are traditions. Bob Scott was
telling me about a governor friend of his, I want to say from Idaho,
that once every year or so would just take off for two or three weeks
and go up in the mountains and would go hunting. Didn't take
anybody, no security, no nothing. Nobody knew how to get a hold of him
and nobody missed him. Government is pretty loose and you have got that
western notion about how government ought to be anyway. And so some of
those things crop into what kind of power a governor really has. Because
if you are treated so casually you may not be able to influence thing
like you would like.

JACK FLEER:

You are one of the few governors of North Carolina in recent decades who
had experience in both the legislature as a legislator and in the
governorship as Governor. So you should have a particularly interesting
perspective on the idea of whether the governorship, excuse me whether
the legislature is too powerful relative to the governor?

JAMES E. HOLSHOUSER JR.:

Was, isn't now. I got along remarkably well I think given what
the law says. But I have always and I think it came to height during Jim
Martin's term of what he called "the gang of
eight." Because in that case you had eight people who had no
responsibility for the whole state. They had been elected by the people
in their districts only. But they were carving up the state budget
without any regard to the executive budget at all. His budget was dead
on arrival just about. They were, I think, way too powerful. It made
great campaign fodder because the press had beat the drums because

Page 71

they were meeting secretly which wasn't
illegal at all. The press just didn't like it. It probably
got Jim Gardner elected frankly because Tony Rand had been one the
"gang of the eight." But I think the balance is much
better now. And I think that if I could do it over again right now, if I
could change anything that has happen, now that you have got the veto, I
would probably say lets get rid of succession. Simple because if you are
in there for four years and you know that that is all you can serve
without sitting out a term, you still want everybody to love you but you
are not thinking about the next election with everything you do.

JACK FLEER:

Well what about the fact that without succession you are in some senses
an immediate lame duck?

JAMES E. HOLSHOUSER JR.:

Yes. That was the strongest argument and still is for it and people, Bob
Scott talked a lot about that. I suspect that if you talk to him about
that he would repeat what he told me is that he really had to work hard
to stay in control the last two years he was in office, particularly the
last year. He had some more colorful stories about the DOT folks. He
called them all in the auditorium one day and told them he was going to
fire them all if they didn't get off their duffs and get
busy. I think there is the potential for the state bureaucracy to start
looking toward that next election. But it doesn't happen
until after the mid term election as a rule. Theoretically you need to
get every, to get most of what you want to do done in that first
legislative term. But I have found that because the state governmental
process where the budget is concerned is not nearly so philosophical in
a way as it is in Washington. Up until 1995 it's much more
likely that you can get cooperation during that third year, in
particular the first, second and third year than you might think. Now in
1995 we unfortunately elected some Republican crazies

Page 72

and they are still just giving problems and I like having
Republican majority but I would hate to be speaker right now and try to
keep that crowd together. I think Brubaker gets a lot of blame for
things that he has had to do just to hold the troops in line but we have
just got some right wingers.

JACK FLEER:

You are taking about the state legislature now, not the national
Congress.

JAMES E. HOLSHOUSER JR.:

Right.

JACK FLEER:

I just want to clarify that for future listeners.

JAMES E. HOLSHOUSER JR.:

Gingrich has had some of that same kind of problem although some of them
he created himself with the agenda that was set up early on although it
didn't directly give a focus. But I think you can say in 1995
when they elected a Republican majority, we elected a variety of
philosophical persuasions at least and it has made it extremely hard to
keep all those kittens in a basket at the same time. But with that
exception, I think, I guess I won't even say with that
exception. I think governors become lame ducks during the campaign
process for their succession and it largely depends on how early that
starts that it happens. Right now I don't think Mike Easley
and Dennis Wicker as potential candidates for governor in 2000 are
making Jim Hunt a lame duck and we are in his second year.

JACK FLEER:

Tell us what can do to keep an orderly relationship between the governor
and the legislature. Its clearly caught up in all these changes that are
going on both during the time you were governor and in the twenty some
years since you have left that position. You said if I understood you
correctly that when you were governor the legislature was probably too
powerful but it is not any longer.

JAMES E. HOLSHOUSER JR.:

That is right.

Page 73

JACK FLEER:

And as I understand it, you attribute that to the change in the power
over the budget.

JAMES E. HOLSHOUSER JR.:

Well, the power of the veto as much as anything. Because I think the
governor's power where the budget is concerned has not
increased that much. But the power of the veto lets you go in and, by
threatening the veto or by the fact that the legislature knows you can
you don't even have to say it, you can get legislation
changed probably easier than you could before.

JACK FLEER:

And it is primarily the threat of it more than the use of it that is
important?

JAMES E. HOLSHOUSER JR.:

That is right. That is exactly right.

JACK FLEER:

Would there be any other changes that you, having looked at the position
from a position of experience but also not being in it, would make in
the office of the governor at this time?

JAMES E. HOLSHOUSER JR.:

I think if I looked at the executive branch of the government, the change
I make would be more for a short ballot, more appointed positions as
opposed to elected positions, for the departments. Very few states have
all appointed positions. They usually have the Attorney General, maybe a
state Auditor, sometimes Lt. Governor, well most time Lt. Governor still
there. But you find public instruction people appointed. You find
commissioners of agriculture appointed often, treasurers, secretaries of
state, sometimes, sometimes not. But you have got to have at least those
sort of regulatory kinds of things. To the extent that the Attorney
General has some responsibility for things that go beyond just being the
state's lawyer and to the extent that the auditor has to be
independent. Those positions in particular probably need to be
independent. As far as the office of the governor itself, there is
probably not that much I would change around.

Page 74

JACK FLEER:

I know that you were very active in the effort to secure approval of the
constitutional amendment to permit succession and I know

JAMES E. HOLSHOUSER JR.:

That is right.

JACK FLEER:

and I know that you also endorsed the idea of the governor's
veto

JAMES E. HOLSHOUSER JR.:

Right

JACK FLEER:

And probably supported that most of the time while you were governor I
suppose and also since.

JAMES E. HOLSHOUSER JR.:

As a matter of fact I tried to get one or both of those while I was
governor having it be effective for the next person so that it would not
get my personality involved in it. Didn't get anywhere there
either.

JACK FLEER:

It is interesting because of course your successor did get it approved,
did get it approved with his benefiting from it.

JAMES E. HOLSHOUSER JR.:

That is right.

JACK FLEER:

And some people say that probably made the difference in his ability. Do
you agree with that in his ability to get it approved?

JAMES E. HOLSHOUSER JR.:

I have heard the same things and I have heard that said in other states,
in other situations, about their veto, or whatever, succession.
Sometimes it usually has to do with the support that the incumbent
governor is able to bring to it. Since he is going to do it he might as
well do it for himself too and that encouraged people to help him along,
his team so to speak. And Jim Hunt came out of the 1976 election with an
extremely strong position within his party and within the state. That
was the perfect time for that to be done.